Gas (Information Disclosure and Penalties) Amendment Bill

Members, when we last debated this bill, we were on call No. 9. This is a split call—I call Joseph Mooney.

I rise on behalf of the National Party to support this bill, the Gas (Information Disclosure and Penalties) Amendment Bill. This bill amends the Gas Act 1992 to provide for enhanced information disclosure requirements for the gas market and to ensure the settings around enforcement and penalties are suitably robust. It does not make substantive changes in and of itself, but it amends the framework to expand the scope of regulation-making powers. A number of the changes require gas industry participants to report forecasts of supply and demand of gas reserves. This is in response to the 2018 Pohokura outage, but it also can be linked to the Government’s decision to ban offshore oil and gas exploration.

National supports more transparent disclosure around current, pending, or possible gas outages, but we need to remember why we’re here. This law is needed because New Zealand is fast entering a gas supply crisis. We heard earlier today during question time about the amount of Indonesian coal that New Zealand is currently importing, which was about 1.1 million tonnes last year and is on track to be significantly more than that this year. That is a direct correlation to the decision by the Labour Party, in the last term, to prohibit the further exploration of gasfields.

This bill does allow New Zealand to understand the situation that Labour has put us in. When Labour banned gas, Minister Woods said there was nothing to be concerned about: we have 100,000 square kilometres of exploration already permitted, we have permits that go out 30 years. She said the sky isn’t falling in. What she didn’t say is that gas doesn’t come out of the ground by magic. Businesses need to invest, businesses need confidence to invest significant resources into both the exploration and the extraction of gas. It is estimated we need $100 million investment per year just to keep the production levels that we have. This has dried up, and we’ve seen gas production fall 40 percent in three years. It has already resulted in job losses at Methanex, in timber mills, and New Zealand Steel have reduced production. Huntly is burning four times as much coal. Greenhouse gas emissions are up. Wholesale electricity prices are four times higher than what we had in 2018.

That is an important issue for low-income or fixed-income families. The price of electricity is a significant cost on households around the country, and particularly in times when it’s cold, as in now—i.e., in winter. Many families in New Zealand have fixed incomes and they have a set amount they can spend on electricity, they have a set amount they can spend on food, and a set amount they can spend on rents. Unfortunately, we are seeing unintended consequences from what you might say are well-meaning policies by this Government but policies that don’t take into account the real, practical implications of decisions that they make.

We are seeing that in the housing market, with the price of houses sky-rocketing and the price of rents increasing $100 per week, and we’re seeing this in the electricity market with the price of electricity increasing significantly, having a direct impact on families and on businesses. It’s certainly something that I’ve heard in my electorate, where businesses have had to reduce production of milling timber, for example, because of the cost of electricity on the spot market.

The other thing is the alternative sources of energy are important in the balance of the mix provided the electricity market can rely on. I note that, just in the last couple of days, there was a very significant storm in Central Otago which knocked down power poles and meant households, in a big storm, including significant snowfall, weren’t able to heat their homes for well over a day and night in some instances.

So the supply of energy to our homes and our businesses is a matter of significant importance, and, unfortunately, Labour has taken an ideological approach to reducing the supply of gas without looking at what is going to replace it and having a replacement strategy in place and actually generating electricity for our market. The direct implication we’re seeing is that we are now importing significantly more dirty Indonesian coal, as it’s often called, than we were only two years ago. I will conclude my comments there.

It is with great pleasure I take a call on the third reading of the Gas (Information Disclosure and Penalties) Amendment Bill. I’d like to start by reassuring the member on the other side of the House—Joseph Mooney—that this Government is indeed doing a lot to invest in the future, which is renewable. I’d like to invite the member to come to the wonderful part of the world that is South Taranaki and visit the Kapuni solar plant and the Waipipi Wind Farm. We don’t just grow milk but we grow energy. We’re really proud of that investment, and we are really, really pleased to see that it isn’t all about a narrow idea of coal.

It isn’t just Kapuni and Waipipi but the significant investment that our world-leading energy sector is making in greengas. Gas is part of the future, but it’s green.

I’d like to take a moment to acknowledge those who made submissions to the Economic Development, Science and Innovation Committee. As I read through them, I noted that they were thoughtful and helpful. The sector engaged in the issues that had been highlighted by the concerns around the outages with natural gas, and it was a piece written by Firstgas that reminded us why these changes have been welcomed. Firstgas talked about consistent and timely information about production outages meaning that efficiencies for maintenance and planning and outages could be greater. So it is really great to have had the thoughtful engagement from the sector about how to make sure that the gas part of the energy sector is best looked after.

There were some changes made in select committee, as a result of submissions, and the recommended change—it was an important one—will ensure that a failure of an industry participant to follow a Gas Rulings Panel order will continue to carry a criminal penalty. The down flow and the impact on so many consumers when things go wrong has been highlighted by members on the other side of the House, and it is important that everyone involved in the industry plays their part to ensure that our energy provision in electricity is done in a manner that is not harmful to those who are using it.

It will help to ensure that the appropriate incentives are in place for the industry to comply with the orders from the Gas Rulings Panel. This bill represents a step forward in improving the information that highlights the risk of critical gas shortages or the potential for significant price impacts, and the impacts that have been highlighted for industries when it’s released to the market, which should improve the management of the situation.

I’d just like to acknowledge again the progressive energy industry that is in Taranaki. The future is bright and it’s lit by green gas and solar and wind. The future is definitely in the energy province, as this Government proudly stands with the sector to take up these significant challenges to decarbonise, and this bill does help with the small but important role that gas currently plays in the electricity market.

I think the way that the sector engaged so sincerely with the challenges presented by the failures in the market, to date, in coming up with solutions which are complex shows the strength of the relationship between this Government and the energy sector. We’ve had tough times, but there is a commitment to collaborate and build a world-class energy centre, and I feel a great deal of satisfaction when I go past Waipipi and look at those blades in the wind—there’s some advantages to being on the west coast of Taranaki. We look forward to our bright, green energy future, and, of course, this is why I am very, very happy to commend this bill to the House.

It’s a pleasure today to take a call on the Gas (Information Disclosure and Penalties) Amendment Bill. I just want to thank the member before me, Angela Roberts, who spoke about her invitation to New Plymouth—I will happily take that. It’s a beautiful part of the country, and it’s doing a lot of good work in just transition, which we should all be proud of.

The bill we’re talking about at the moment will amend the Gas Act of 1992. The Act is the principal piece of legislation that governs the gas industry in New Zealand. The gas industry is co-regulated by the Government and the approved industry body, the Gas Industry Company (GIC). The original Act empowers the making of a wide range of regulations relating to matters that govern the gas industry; however, recent natural gas supply outages have raised concerns about the lack of transparency of information in the gas market. The outages include those at the Pohokura production station in 2018, as well as planned outages at other stations. Outages at gas production stations can affect gas availability and prices, as we have seen in the past. They also affect the electricity market, which uses gas for thermal electricity generation, which acts as a backup electricity supply during periods of high demand when limited electricity storage is available—for example, the outage, as I mentioned, in 2018 led to increased prices for many consumers during the spring of 2018. Some power companies even reported receiving only minimal information about how long the disruption was expected to last. The outage also reportedly cost its main customer around $2 million a day in lost revenue—$2 million a day.

The bill as proposed now, which has gone through the Economic Development, Science and Innovation Committee, would expand the scope of the regulation-recommendation powers available to the GIC by inserting provisions enabling enhanced information disclosure about the gas market. Information able to be disclosed would be matters that may have a significant downstream impact or may contribute to the risk of critical gas shortages. These provisions would enable regulation that could apply to all industry participants and non-industry participants. They will not apply to domestic consumers, and the types of information that might be required to be provided or disclosed are broad and non-exhaustive.

The bill would also amend the penalties regime under the Act for regulation or rules breached by industry and non-industry participants. It would increase the $20,000 civil pecuniary penalty limit for Gas Rulings Panel orders to $200,000, so that’s a tenfold increase. It would also replace the current criminal penalty for non-industry participants with a civil pecuniary penalty. This aims to make the penalties for industry participants and non-industry participants more aligned so it brings everybody on to the same playing field.

Now, yesterday, when I was hearing members on both sides of the House talking about it, there were members of the select committee who talked about receiving a significant number of submissions, which has led to, I guess, a few different changes being made through the select committee process. One of them was that the recommended change will ensure that a failure of an industry participant to follow a gas rulings panel will continue to carry a criminal penalty. The second one was that this will help ensure that the appropriate incentives are in place for the industry to comply with the orders from the Gas Rulings Panel, as I have mentioned before. And, thirdly, the bill represents a step forward in improving how information that may highlight risks of critical gas shortages or potential for significant price impacts is released to the market, which should improve the management of situations where critical gas shortages may occur.

So, overall, this bill significantly enhances the original Act of 1992, and I do want to commend the Minister Megan Woods for putting this Government bill forward, as well as the Economic Development, Science and Innovation Committee, which has spent quite a lot of time consulting with people across various communities and, I understand, communities like New Plymouth and Taranaki, where a lot of members and their constituents have fed into this consultation process. So I think it is a strong bill and it will only help with the just transition and other measures the Government is taking in the energy field across the board in New Zealand, and I would highly recommend this bill to go ahead, and just want to thank everybody who’s been involved in the consultation process—thank you.

Thank you, Madam Speaker. It is a pleasure to speak on the Gas (Information Disclosure and Penalties) Amendment Bill. It really is topical at this moment to be talking about this issue, of course. We have significant increases in electricity prices coming down the pipeline to the homeowner very shortly as a result, in part, because we’re in a dry year. But our normal dry-year winter peak is covered by gas and coal, and, unfortunately, due to circumstances in the gas industry, we don’t have the gas that we would normally expect to get us through, and so the hydro companies held back water, as is the right thing to do, through the summer and autumn and early winter to ensure that they had enough to get us through this period. However, the costs to the homeowner are going to come home to roost, as it were, later on, in the coming weeks.

Unfortunately, for the industry, this has already occurred. Businesses had to curtail production and, in some cases, even close because of the extremely high spot-market prices for electricity. This bill seeks to ensure that there’s more information available for all players so that decisions can be made ahead of time. However, in the whole electricity and energy sector, information is power. It’s also essential. Unfortunately, some of the moves that have been made by this Government have actually slowed down what would have been developing other generation sources, because the industry doesn’t have the confidence to invest money in what are very long-term investments. They can’t invest money in gas exploration or refurbishment of their wells if they think that they’re going to be cancelled in five or six years, and that’s, unfortunately, the uncertainty that we’re facing right now.

There’s $100 million a year required in the maintenance of these gasfields to keep the gas flowing. Unfortunately, that cash has not arrived—not all of it, anyway—and that is why the dry-year issue that we’ve had, as well as the shortage of gas, has driven the price much higher than it would have otherwise been, and we’re all going to pay the price for that. Some people have already paid that price by losing their jobs. So these things have real impacts. Something like an oil and a gas ban has drained the confidence of the industry, so this bill is a step to try and sort this out, to some extent. Although, this has not led to the issues we’ve had today, a lack of information; it was actually a lack of investment. But the National Party is here to help bail the Government out, because, actually, New Zealanders need our help, and we’re here to help.

I think it’s been quite extraordinary, some of the things I’ve heard in the earlier speeches yesterday on this topic. Someone referred to unicorns and rainbows.

💬 Simon Court: That was me!

Was it? Yes, that’s right. I think it was the ACT member Simon Court. His reference was actually absolutely apt. We also heard from the Green member about a just transition, which actually is code for wealth redistribution. We are not here to support those sorts of policies; we’re here to ensure that we can keep the lights on, that we can keep the mill that Joseph Mooney, the MP for Southland, mentioned in his earlier speech that had to curtail its production because of the extremely high cost of electricity, at least.

Now, the gas companies right now, or in a very short time, are going to have to be making a decision: who do they supply their gas to? Do they supply it to the domestic users, do they supply it to commercial users, or do they supply it to the electricity sector to keep the lights on?

💬 Maureen Pugh: Tough choice.

It’s a tough choice—it is—and we’ve got the Huntly coal-fired units running at 100 percent. I just looked at the figures for today just now, and it’s almost running at 100 percent. It’s extraordinary that we’re in this position today when we all have agreed to head towards net zero, and we are burning coal like drunken sailors to keep the lights on. I think it is so important that decisions that Governments make, announcements that they make, they realise have ongoing impacts on industries’ decisions.

It was really disappointing yesterday to be at an electricity and energy event where there were Opposition MPs and one minor backbench MP from the Government. They didn’t turn up to hear one of the chief executives of an energy company—Genesis—give a wonderful address about this very issue. Had the Minister been there, she would have learnt something.

💬 Maureen Pugh: They don’t want to hear.

I don’t think they do want to hear, but they have to face up to the issue that they caused: that we now are all going to be paying much more for your electricity bill. When it comes through the mail or over the internet and you realise that you’re going to be paying significantly more, you can thank the Hon Dr Megan Woods because she is the person responsible for that increased cost. But we are here to help, and with that, I commend the bill to the House.

Thank you, Madam Speaker. It is my pleasure to rise and take a call on the third reading of this bill on the last day, of course, as well, of this sitting block. I want to begin by wishing members a very productive recess in the coming weeks.

I want to also acknowledge the work of the Minister the Hon Dr Megan Woods for her work to support the energy sector, and, indeed, a just transition. As members have explained in the House already today, this bill makes amendments to the Gas Act 1992. This bill is important for ensuring that we have the appropriate requirements that can be put in place for supporting the security of supply and to improve outcomes—

💬 Simon Court: That would be more gas. That’s what you need.

—for our energy consumers. Well, Mr Court, the problem is that, since 2000, despite a lot of exploration right through Taranaki, there hasn’t been any more gas found, so—

💬 Simon Court: That’s not correct; there’s been lots more gas found.

No, unfortunately there hasn’t. That’s why we need to be focusing on alternatives. I would like to point out that, in my electorate, we are seeing a lot of development of those alternatives happening right now.

So as my colleague Angela Roberts mentioned earlier in this debate this afternoon, we’ve got the Waipipi Wind Farm, which is a 700 hectare wind farm on the coast between Waverley and Pātea in South Taranaki. It’s prime coastal land, the first wind farm to be built on flat land. It’s the biggest turbines that we’ve had built in New Zealand to date. That wind farm is producing renewable energy which powers over 65,000 houses in New Zealand, cutting emissions. That is the direction that we need to be moving in.

As I was explaining before, this bill is about an amendment which will enable better provision of information around the supply of gas, because, as has already been discussed during this debate, we are experiencing dry years here in New Zealand, which puts a lot of pressure on the supply of electricity. So what we need to do is ensure that there is information coming out, that it’s coming out quicker, in a timely manner, and it enables companies and consumers to be able to respond without putting pressure on the market and increasing the cost of electricity supply for our public.

So the other thing that the bill does is it makes changes to the Gas Act’s penalty regime. So it amends the penalty regime so that for industry participants, increasing the maximum civil pecuniary penalty available to be imposed by the Gas Rulings Panel for breaches of gas governance regulations from $20,000 to $200,000. This has been done to address concerns that have been raised by a wide range of parties about the low level of penalty, which isn’t having a deterrent effect. So this new penalty limit will apply across all gas governance regulations.

It also creates a new penalty for consumers who are not industry participants, who will now be subject to a civil pecuniary penalty instead of a criminal penalty if they breach the gas governance arrangements. So this will ensure their fair and equitable treatment.

I want to touch on a couple of points raised by members across the House during the course of this debate who have alleged that the technology to phase out the use and reliance on gas and, indeed, coal, as well, just isn’t there yet. I really strongly dispute that for the reasons that I’ve already outlined around Waipipi Wind Farm. There’s another new farm in my electorate that I’d also like to mention for a brief moment.

💬 Simon Court: Is it a solar farm?

That’s right, Mr Court, we’ve got a solar farm. So in Kapuni, in South Taranaki, the Todd Corporation has recently completed the building of a solar farm. That includes the installation of 5,800 photovoltaic panels which generate enough electricity to power a further 520 homes. That has been contributing electricity to the local network since May earlier this year.

But also supporting our transition away from the reliance on fossil fuels, which we know will run out in the not too distant future is a place—also from Taranaki, funnily enough—called Hiringa Energy.

💬 Angela Roberts: Green gas.

That’s right, green gas. They have partnered with Ballance Agri-Nutrients in Kapuni again to produce green hydrogen—green gas. Go figure. What they’re going to do is they are looking at, again, relying on installing wind turbines to generate electricity to then produce green hydrogen—hydrogen created without the need for coal or any other fossil fuels. That is going to be the start of our transition to using hydrogen as a fuel in our transport sector. So I am really proud to stand here as the member of Parliament for Whanganui—which includes Taranaki—and be able to share with the House, and those at home watching, just how far we have come in Taranaki in terms of progressing to a renewable, sustainable future and making sure that the next generation are getting a better deal and have an environment to come back to.

I’d also, for those members who are a bit concerned about jobs, like to remind them that with all of this new technology comes new jobs. That’s where the just transition comes in. What it is is supporting those people who have been working in those industries which we do need to phase out in order to reduce our emissions to make sure that they take up jobs in these new sectors with new energy. With that, I’d like to commend this bill to the House.