Gas (Information Disclosure and Penalties) Amendment Bill

I move, That the Gas (Information Disclosure and Penalties) Amendment Bill be now read a first time. I nominate the Economic Development, Science and Innovation Committee to consider the bill. At the appropriate time, I intend to move that the bill be reported to the House. It is important that this bill be passed without undue delay, to ensure that any new regulatory requirements are put in place as soon as possible to support New Zealand’s security of supply and improve outcomes for energy consumers. I therefore intend to move that the committee has the authority to meet at any time while the House is sitting, except during oral questions, and during any evening on a day in which there has been a sitting of the House, and on the Friday in a week where there has been a sitting of the House, despite Standing Orders 191, 194(1)(b), and 194(1)(c).

This bill seeks to strengthen the regulation-making powers in the Gas—

ASSISTANT SPEAKER (Adrian Rurawhe): Sorry to interrupt the Minister, but when the Minister is moving an instruction or advising the House, she must give the dates.

So, in terms of the intent to move that it be reported to the House, that will be for the committee to decide when they report it to the House, Mr Speaker.

ASSISTANT SPEAKER (Adrian Rurawhe): OK, thank you.

This bill seeks to strengthen the regulation-making powers in the Gas Act 1992 to provide for enhanced information disclosure requirements for the gas market, and to ensure that settings around enforcement and penalties, particularly for managing critical natural gas shortages, are suitably robust.

In 2019, New Zealand experienced prolonged outages at Pohokura gas field, which provides approximately 40 percent of the natural gas supply. This outage coincided with other outages at gas fields, and in a time of constrained hydro-generation due to dry spring conditions. This led to record natural gas spot market and wholesale electricity prices, which has emphasised the need to ensure that the regulatory settings around the disclosure of important information to the market are fit for purpose. A wide range of parties have highlighted their concerns with the current level of information being disclosed by gas market participants, particularly if this information has significant downstream impacts, including impacts on businesses who may not be involved in the natural gas industry.

The bill expands the scope of regulation-making powers to enable gas governance arrangements to be made that provide for a broad regime for the disclosure of information about matters that may have a significant downstream impact, or may contribute to the risk of critical gas shortages. The bill proposes that in order for these regulations to be made, the Government must first receive a recommendation from the industry co-regulator, the Gas Industry Company. This is consistent with the current co-regulatory approach for the sector. The Gas Industry Company has been undertaking work to investigate improvements to voluntary information disclosure since I wrote to them on the topic in mid-2018. These amendments are complementary to this and provide clear regulatory backing for a potential regulated information disclosure regime.

The bill’s transitional provisions ensure that the work the Gas Industry Company is currently undertaking will be considered as part of the process for forming a recommendation for a new gas governance arrangement, should they be needed. The bill also makes several amendments to the penalty regime for industry participants and consumers for breaches of gas governance arrangements. It is important to note that residential consumers are excluded from the penalty regime. The bill amends that penalty regime for industry participants by increasing the maximum pecuniary penalty able to be imposed by the Gas Rulings Panel for breaches of gas governance regulations from $20,000 to $200,000. This addresses concerns about the low level of civil pecuniary penalty able to be currently issued by the Gas Rulings Panel, particularly for situations where a wide range of consumers may be affected by a potential breach, and brings this penalty into alignment with the equivalent legislation under the Electricity Industry Act 2010. This penalty limit will apply across all gas governance regulations. This penalty replaces the current criminal penalty, and it is intended that it will be used to deter breaches of regulations by consumers who are not classified as industry participants, which includes some of the large consumers of natural gas.

The bill also makes a number of supporting changes to enforcement provisions in the acts, and seeks to clarify current practices around these. The bill makes a range of more minor changes relating to the gas regulatory regime—for example, the bill clarifies the existing policy intent that regulations relating to outages and other security of supply contingency may apply across all industry participants and consumers, excluding domestic consumers. The bill represents a step forward in improving how information that may lead to critical gas shortages or significant price impacts is released to the market and for the management of situations where critical gas shortages may apply. I commend this bill to the House.

Thank you very much for the opportunity to speak on the Gas (Information Disclosure and Penalties) Amendment Bill. Thank you, Minister, for your introduction of the bill and outlining the issues. We will be supporting this bill to select committee, because I think there are lots of elements to it which I think will improve the regime, as the Minister has stated.

The issue, of course, was brought to our attention, as the Minister said, in September 2018 when the Pohokura pipeline had some leaks and the operator at that point in time needed to investigate that. As part of that process of a planned outage around that remediation and maintenance, there became a further issue around a shut-off valve which extended the inoperability or the limited operability of that field. As the Minister said, the Pohokura gas field, which is offshore of Taranaki, supplies 42 percent of New Zealand’s natural gas, and this became a significant issue that affected not only the spot price of gas, but also the spot price of electricity for an extended period of time, which I’m sure I’m not going to be able to talk about for much longer as we hit 10 o’clock at night.

Debate interrupted.

The House adjourned at 10 p.m.