Electricity Industry Amendment Bill

on behalf of the Minister of Energy and Resources: I present a legislative statement on the Electricity Industry Amendment Bill.

ASSISTANT SPEAKER (Hon Jacqui Dean): That legislative statement is published under the authority of the House and can be found on the Parliament website.

I move, That the Electricity Industry Amendment Bill be now read a second time.

The bill will implement a number of the recommendations from the 2019 electricity crisis review. It will support the Government’s efforts to adopt the right regulatory and market settings for an electricity system that supports a low-carbon economy. The bill will promote competition and innovation in emerging distributed energy markets, such as by allowing the Electricity Authority to amend, extend, or revoke arm’s length requirements between distributors and affiliated businesses. The bill will reduce industry costs through enabling the Electricity Authority to regulate more standardised distribution access agreements. The bill will also protect the interests of small consumers through providing clearer powers for the Electricity Authority to regulate how retailers deal with medically-dependent and vulnerable consumers, such as for non-payment of their electricity bill.

The bill has four main purposes, which are informed by its sponsor, the Hon Dr Megan Woods: to provide for the establishment of a small electricity consumer advocacy agency and enable the levy on industry participants to recover the Government’s costs relating to small electricity consumer advocacy. To remove ambiguity in the ability of the Electricity Authority to amend the Electricity Industry Participation Code 2010, the code for the purposes of protecting household and small business consumers. Thirdly, provide more regulatory agility to promote competition in evolving contestable markets by shifting from the Act to the code a number of existing provisions relating to a distributor’s involvement in regeneration or retailing activities. And fourthly, ensure that the code can regulate distribution access terms and conditions, as it already does in relation to Transpower.

Following the bill’s first reading in September, it was referred to the Economic Development, Science and Innovation Committee where it was, I’m told, extensively examined. The committee tabled its report on 22 March and it falls to me to thank the committee for its work. It received 41 written submissions and heard 18 oral submissions, and those submissions have resulted in a small number of amendments to the bill which were unanimously recommended by the committee. While some minor and technical amendments have also been proposed, in this contribution I’ll discuss the main amendments which the committee has recommended.

First, it’s recommended that the bill be amended to enable the Electricity Authority to share information with overseas regulators, in particular the Australian Securities and Investment Commission. That’s because ASIC, as it’s known, regulates the Australian Securities Exchange, ASX, on which New Zealand electricity futures contracts are commonly traded. The amendments include appropriate safeguards on the use of information, including compulsorily acquired information, ensuring that it may not be used by an overseas regulator to incriminate the person who provided the information. This amendment will also enable the Electricity Authority to share information with New Zealand’s gas industry co-regulator, the Gas Industry Company. The electricity and gas industries are closely related, and information obtained by one regulator could be valuable for the exercise of functions by the other.

Secondly, the committee recommended that the time-limited backstop power given to the Minister of Energy and Resources in the bill be brought forward by one year to help lessen any potential regulatory uncertainty. This backstop power would allow the Minister to amend the code in relation to specified matters if the Minister is not satisfied with how the code addresses the specified matters. It is recommended that the period during which the backstop power may be exercised would now be not earlier than one year after and not later than three years after the date of enactment.

Third, it’s been recommended that the bill be amended to clarify the ability to define a new industry participant. This would allow regulations to identify any persons, not limited to industry service providers, as industry participants where their activities or roles in the electricity industry are material to the Electricity Authority’s objectives. That will ensure that the code would apply to new industry participants and help to continue to promote competition in evolving contestable markets.

Finally, a number of amendments resulting from a review of the electricity compliance framework have also been recommended. This review was recommended by the 2019 Electricity Price Review to bring the compliance framework and related enforcement regulations up to date with best practice. This review was completed by the Ministry of Business, Innovation and Employment last year and resulted in a number of proposed changes to the Act, as well as other proposed changes to the Electricity Industry (Enforcement) Regulations 2010. The amendments recommended are: to increase the maximum penalty for a code breach from $200,000 to $2 million; allow an additional $10,000 penalty for each day that a breach continues; give the rulings panel discretion to award costs whether or not it determines a breach has occurred; and clarify that code breaches resulting from a series of closely related events are treated as a single breach subject to a single penalty rather than separate breaches subject to multiple penalties.

During the select committee phase, some submitters did raise opposing views to certain provisions in the bill, in particular, the additional consumer protection objective for the Electricity Authority and moving aspects of Part 3 of the Act into the code. While these views were examined in detail by the committee, I believe it is worth noting them again—and I’ll note again that the committee was unanimous in its recommendations that it did make. Some submitters suggested that the additional consumer protection objective for the Electricity Authority would be unnecessary and should be limited to a consumer protection function only. However, analysis conducted during the drafting process concluded that it is prudent to also change the objective, due to the risk that a consumer protection rule might be considered inconsistent with the existing objective. I note the select committee’s report did not recommend any amendments to this provision in the bill as drafted, and I agree with this decision.

Protecting small consumers is intended to be a relevant consideration for a relatively small portion of the Electricity Authority’s work. It is expected to come into play only when the Electricity Authority is considering the conduct of retailers and other participants that deal directly with small consumers, where there is an imbalance of power in those relationships that can result in adverse outcomes for small consumers. I also note some submitters were concerned about moving elements of Part 3 of the Act into the code, which will enable the Electricity Authority to revoke or amend the existing business restrictions that apply when distributors are involved in generation or retailing. Submitters viewed that such intrusions on commercial freedom and property rights are generally a matter for primary legislation rather than delegated legislation. The select committee’s report did not recommend any material amendments to this provision. I believe this is the correct recommendation as technology advances are increasingly, and will continue to, blur the boundary between distributors and retailers.

The Electricity Authority needs to be able to develop rules in the code. A secondary legislative instrument that can respond if distributors use their monopoly position deliberately or inadvertently to deter competitors from entering the market for such products and services, or disadvantage those already in the market. This will help ensure that consumers can benefit from new products and services that offer high quality, lower cost, or more choice enabled by these emerging technologies and consumers.

In closing, this bill will ensure the electricity regulatory system is more future-fit in light of significant changes occurring in the industry. I look forward to an enthusiastic and enlightening debate and I commend this bill to the House.

The question is that the motion be agreed to.

Thank you, Madam Speaker. Well, I’m sure we’ll be able to deliver for the Minister, who has just retaken his seat. The Electricity Industry Amendment Bill does have some good features to it. It has some bad features to it. On the basis of those features, we will be voting against it. The bill—it does what the Labour Party do quite well—adds in more bureaucracy, and we have, in particular, the establishment of an Electricity Consumer Agency to represent small businesses and private consumers. We already have a Commerce Commission. We have other mechanisms to deal with those sorts of issues, and we fail to see why we would need another agency to represent those people. It is true that we have had some issues in the past with people who have serious illnesses and have had their electricity turned off inadvertently by a lines company unaware that there was an issue in that particular household. But that’s largely been dealt with, but still it is good to have those things dealt with in a proper way.

In fact, we see, if we graph the access to energy and GDP, they track one another almost identically—as does the increase in life expectancy. So electricity and the access to energy is absolutely essential in a modern world and—I note in the Minister’s opening statement, he said—in a low-carbon economy, which seems to be in every speech, just about, being given these days. It is important, but what’s more important in the energy trilemma is, actually, energy security and, then, secondly, energy affordability, and, I think, then, going to the renewable aspect as the last leg of the stool. Unfortunately, if you take one of those legs away or put too much emphasis on one, a three-legged stool does work a lot better than a two-legged one. Unfortunately, we’re having a lot of focus these days on a one-legged stool, and the other two legs have been forgotten. And we only have to look to the UK to see the issues that this bill brings up as potential issues for us to face here, and that is that as electricity prices go through the roof, energy security for people becomes at risk, and people have to make a decision either to heat or to eat, and that is a huge issue in the Northern Hemisphere as we speak.

One of the other things that really concerns the National Party is the fact that the Minister has the power to change the code under a set criteria in the bill, and I think that’s really of great concern to the National Party. It’s a massive overreach, really, because the Minister is going to take the role of the Electricity Authority, for whom, actually, that is their job and their role. They live this every day, and yet the Minister and/or some of her officials in her office, or whoever happens to be the Minister at the time, will have the power to make those decisions, and I would argue the Electricity Authority is far better placed to know that. Certainly, if we leave those sorts of decisions in the hands of a Minister, that is the road to disaster.

💬 Barbara Kuriger: Particularly this Minister.

Well, I couldn’t possibly comment on that. I think it’s akin to giving the Minister of Finance the power to say, “I don’t like the official cash rate that the Reserve Bank of New Zealand have just set. I’m going to change it. I’m going to make it whatever the number is.” We don’t do that, and yet that’s exactly the power we are giving to the Minister within this bill, and that is why we oppose this bill. It’s actually not needed. It’s not necessary. It’s an overreach, and I think this particular Minister has a view of doing this sort of thing all the time; this is a bit of a track record on this—

💬 Barbara Kuriger: Overreach.

—and it’s not good. It is overreach. It’s something I’m very concerned about, and I’m sure other speakers will be as well.

I would like to just list some of the reasons that under new section 44B: “[The] Minister may amend [the] Code to include specified matters … including provisions for any matter specified in subsection (2) if the Minister—(a) considers that the Code’s provisions for the specified matter are not satisfactory; and (b) is satisfied that the amendment will further the Authority’s objectives in section 15.” Well, how is the Minister better placed to do that than the Electricity Authority? I don’t know. We’ve got a former Minister of Energy, who’s going to speak later in this debate, from the National Party, and he’s a very good Minister of Energy, and I’m sure he’ll be able to bring—I’m not casting aspersions on any Minister, but I doubt any Minister has the wisdom to be all over this in the way that the Authority would be, and don’t think they have the right to do that. I think, further on in 44B (3): “The Minister may amend the Code under this section as if the Minister were the Authority, and sections 38 to 40 apply accordingly, with any necessary modifications.” I mean, it says it all. Why have an authority if you’ve got a Minister that knows it all? There’s no need for it. I just think—

💬 Hon Gerry Brownlee: Back to the future.

Yeah, it is back to the future. I’m reliably informed this used to be the way things were done and that’s part of the reason we have an Electricity Authority these days.

So I won’t delay this anymore. We do not support the bill, on the basis that I’ve outlined, and I think that the Government would do well to learn from this debate in this era and not try these sorts of things in the future.

Thank you, Madam Speaker, for the opportunity to take a call on this piece of legislation at the second reading. I’d like to acknowledge the Economic Development, Science and Innovation Committee, of which I am the chair, for the work that they’ve done on this piece of legislation. I’d like to acknowledge the Minister, the Hon Dr Megan Woods, for bringing this bill to the House, the staff—who work tirelessly in this place, with a lot of that work unseen, and I’d like to acknowledge them—and the submitters who submitted on this bill.

Minister Dr David Clark, in his opening speech on behalf of the Minister, outlined some of the submissions that came forward and some of the changes that the committee made. The Minister highlighted that those changes were made unanimously within the committee, and I confirm that that was the case. There was unanimous support for those changes across all parties.

In 2019, the Electricity Price Review found that smaller consumers struggled to make their voices heard and influence the electricity sector. Obstacles included the sector’s complexity, consumers’ lack of resources, and cultural differences and language barriers.

We have a relatively small country here, and with small countries and small markets there can often be a move towards anti-competitive behaviour. I believe that it is the Government’s role to ensure that we have competition in all of our markets, and one of those markets is the electricity sector. As a Government, it behoves us to ensure that that competition is there. Our view is that this piece of legislation brings more competition to the electricity sector, and that will ensure that consumers benefit, ultimately, from that competition.

I’m not going to take too much more time, but I will just touch on the aspect around technological advances. The Minister mentioned it in his speech, and this bill highlights the need for more adaptive regulation as emerging technologies arise.

All sectors have emerging technologies, and the electricity sector has a number of emerging technologies. It’s important that we can adapt to those technologies, and this bill will give the authority greater flexibility to respond quickly, if necessary, to develop rules that can respond if existing participants use monopoly or market power deliberately or inadvertently to deter competitors from entering the market for such products and services, or to disadvantage those within their market.

So that just highlights one example of the importance of having that competition in the market. It is the Government’s role to ensure that competition remains, and, basically, this bill ensures that the competition does remain. Thank you.

This bill is nothing more than window dressing to give credence to a failed review by the Minister. It’s unbelievable. The Minister went out some years ago and said, “We’ll have a review of electricity pricing.” There was a big noise made about how prices were too high, etc.; they may well have been, but there will always be some reason in a market system as to why a price goes up and why a price should come down. But there is nothing in this bill that would make any of that any more compelling than exists at the moment.

I think it’s important to recognise the history. This bill has been in place for 12 years. Over the 10 years prior to that, New Zealand had five electricity crises years; years where everyone was asked to conserve electricity because our supply was starting to run out. The extraordinary thing was, watching it then from Opposition, was that, actually, the faceplate capacity for generating electricity never changed; what changed was: each year that the available supply of energy for conversion into electricity energy was artificially manipulated, and so there had to be some change to the system. That 2010 Act did make that change; prior to that Act, we had a thing called the Electricity Commission that was put in place by the Helen Clark Labour Government. It was an attempt to try and get a few more rules around distribution, etc., but it did not go far enough and it did not deal with the single problem that you’ve got: that electricity is an immediate medium. It can be put into a battery, certainly, and stored to some extent as usable energy, but, by and large, once it goes down the line, it needs to be used. The question always is: how is someone who is distributing or generating able to be paid for the work that they’ve done to get that energy conversion so that that electrical energy is available to the economy? Now, that does mean that you will have an enormous number of rules, an enormous number of algorithms, an enormous number of nodes and distribution points, take-off points—you could go through all of the acronyms you like that this industry is so full of, but they are all important because they simply are about getting the electricity supply to where it needs to be.

I have to say that since these changes were made in 2010, New Zealand has not had an electricity crisis. We have not had a dry-year shortage of electricity. We haven’t had the sort of runaway pricing that we were experiencing for 12 years prior to this bill coming in. That is quite indisputable.

What we’ve got here is a Minister who decided that she could take on the electricity industry and sort out things for the consumer, make it a lot better, and all we’ve got is these few recommendations to come out of that very expensive review, many of which simply confirm the powers that the Electricity Authority currently has.

The bits that are alarming in here are that we’re apparently going to establish yet another consumer advocacy body—there are heaps of them out there; we’re setting up another one—and it’s going to be paid for by consumers. Now, the other side of the House will say, “No, no; it’s going to be paid for by the electricity producers and distributors.” Well, who do they on-charge to? Consumers. So here we have an effort from the Minister to drop the power price by increasing it. Now, that just doesn’t make any sense whatsoever.

Then there is this issue of the so-called codes or the rules under which all of the distributors and generators work being subject to change by the Minister. Well, let me tell the House that, prior to this Act, that is what happened. The Ministry of Business, Innovation and Employment (MBIE) would take some rule recommendations—and they were daily almost—from the Electricity Commission, they would have a look at them themselves, and then they’d bring them to the Minister and say, “Minister, you need to sign these into some kind of action.” One of the interesting things I found was that in asking for an explanation in what those rules did, very few people at MBIE could ever tell you. So there was a need to have a body that was specialist in this regard. That’s why the authority was set up. I think that taking this back from the authority is a retrograde step—very retrograde.

Then, of course, there’s the issue, as just stated by Jamie Strange, the chairman of the committee that considered the bill, saying that this is going to enable greater competition. Well, how? How? Anybody can become an electricity distributor in this country if they want to. Anyone can become a retailer of electricity. They can buy that product on the market, they can buy it on the forward market, they can buy it on the futures market, and they can market it or sell it to whoever is prepared to buy it off them. The price will always be set by what is, effectively, the price of the day; often, averaged over a period of time. There will be ability to take out long-term hedges. All that exists now; it’s not going to change because of these very minor proposals in this bill. I still can’t work out exactly what it is that would give anyone confidence that this is going to increase competition.

So, beyond this second reading, there will be a committee stage, and the Minister is going to have to explain to the House, and therefore to the country, how some of these very cosmetic changes, alongside the very significant change of taking power or authority off the Electricity Authority back into the Minister’s office, is in any way going to benefit consumers. The reality is that electricity demand is going to increase in this country. We do need to have a greater effort on conservation—that doesn’t mean not using it; it means using it better—and also, of course, new generation as well. We know that new generation is just a nightmare for anybody wanting to bring it on stream at the moment through the Resource Management Act. Let’s be very clear: the Southern Lakes scheme would never get built in today’s age—never get built. Yet it is the thing that so many people on the other side of the House go about crowing about because we’re at 80 percent renewable. We’re actually at less renewable now than we were in 2017.

Then, of course, there is the big question that’s not answered in this bill: why is New Zealand importing coal to burn for electricity production? Why are we doing that? Why does the great climate-change-is-the-issue-of-our-generation Government allow that to happen? They’re all over there, mumbling into their masks saying, “It’s not happening—it’s not happening.” Well, go and have a look at the massive stockpile that exists at Huntly.

💬 Stuart Smith: 800,000.

Go and find out—my colleague here says that it’s 800,000 tonnes; call that a million. It’s a huge amount. Ask yourself: why is it that we’ve practically destroyed a transition fuel—gas—in this country, so that we can import coal from Indonesia? It’s great for the Indonesians; not good for us. Unbelievable—unbelievable.

So there’s no need to take the full time allocation on this! We’ll certainly be taking a lot of time in the committee stage, because this is, as I said before, what you might describe as a vanity bill. It’s the sort of bill that a Minister comes up with when the actual results from an expensive review don’t show up anything of any great significance. So it’s a bit like Minister Faafoi today, saying that when he gets grumpy, things happen; well, in this case, obviously, the energy Minister got a bit grumpy, saying “Well, you know, I said we’re having a review, I said we’re going to drop the price. We’ve got to do something.” So the officials have scurried back and they’ve come up with this bill. It’s taken up a lot of the House’s time, it’s got a huge amount of promise if you listen to speeches that have been made today, but it won’t make one bit of difference to the price that consumers pay for electricity, beyond the additional cost they’ll face in paying for their own advocacy group. That’s what the Minister’s supposed to do; not have some greater-good group over there paid an enormous fortune to give that advice.

So this is not a bill that we’ll support. It is a bill we’ll try and make a little bit better through the committee process. I look forward to that.

Thank you, Madam Speaker. It’s pretty disappointing to hear the last two contributions from the other side of the House, especially from two members, Gerry Brownlee and Stuart Smith, who don’t sit on the great Economic Development, Science and Innovation Committee that is ably chaired by Jamie Strange. And I do want to acknowledge our chairperson on that select committee, and I want to acknowledge the collegial nature in which we work in that select committee, trying to make each bill that comes through our select committee better. I am absolutely proud of the changes that we’ve made to this bill to make sure that we are looking after all of the consumers within our electricity market.

There is one thing that I do agree with the Hon Gerry Brownlee: he’s saying that history is important, and I do want to go back to 2018. Back then when the Minister of Energy and Resources had commissioned the independent review of New Zealand’s electricity market, the electricity price review, the EPR, and they had come back to us with the following recommendations that I want to reiterate to the House. They suggested, amongst other things, the Electricity Authority’s work on transmission pricing, the new Interim Climate Change Committee’s work on how to reach 100 percent renewable electricity by 2035, and the Productivity Commission’s low-emissions economy inquiry. So they had to consider all of those things in there, and then they came back with the actual recommendations to establish an interim Consumer Advocacy Council and a permanent council within 18 months, and we’re going to do that through this bill, to ensure regulators listen to consumers, and to define energy hardship.

I’m proud to take a call in a week where we’ve just released our climate action plan and our emission targets. This bill will be another step in terms of us achieving that low emission economy that we, actually, on this side of the House, have ambitions for and that we will deliver. So, on that note, I commend this bill to the House.

Tēnā koe, Madam Speaker. Thank you. I find myself, at short notice, taking a call on the Electricity Industry Amendment Bill and regret that I wasn’t on the select committee that was considering the bill.

I think it’s been interesting, the National Party contributions, because of course it was Max Bradford’s changes to the whole sector in the 1990s which created quite significant problems. Then, of course, it was its partial privatisation of State-owned enterprises like Meridian that also led to Meridian now making super-profits. So in terms of National, I’d also encourage them to actually read the climate plan, because, like the previous speaker, the emissions reduction plan and the initiatives that are outlined there are all about taking us to 100 percent renewable energy. Some of the key initiatives in the emissions reduction plan are to improve business and household energy efficiency, to ensure that our electricity system is ready to meet future needs, to ensure that we are investing much more in renewables; it’s been that failure under the previous National Government to have a strategy like that which is why we still depend on coal for part of the baseload generation for Huntly.

So this bill is part of ensuring that we have more power for consumers, that the Minister, if she doesn’t think the industry is operating satisfactorily can intervene on the side of consumers and ensure that there is fairness there, that things are more affordable. It’s also about ensuring that we do make those moves to invest in renewables, because one of the current failures is the lack of a strategy in the past for that. We’ve had the big players dominating, investing to meet their commercial imperatives, rather than to benefit Aotearoa nationally, in terms of ensuring that we’ve got adequate electricity generation to take us through some of those dry years and to ensure that we’re investing more in renewables.

There are so many opportunities to do that. It is soul-destroying to see the plethora of new homes which are springing up in areas like Selwyn, around Rolleston, and how few of them have solar panels on their roofs, despite the abundant sunshine in Aotearoa, with things like this Government’s proposed changes to the building code to make it easier for people to put in place solar panels—and it’s that whole strategy which is where we need to go. So this bill is a part of that puzzle.

It’s all about rebalancing away from the big corporates to allow the Minister to actually act on behalf of consumers and smaller players. It’s to ensure, too, that we get much more distributed generation. The number of times that small communities, such as the Blueskin Bay community, have sought to have small wind generation and been frustrated—not only by the Resource Management Act but also by how that power gets fed into the grid.

So this bill is about the sort of changes we need to implement the emissions reduction plan. It’s about being on the side of consumers and households, ensuring we don’t have energy poverty, that electricity is more affordable, and it is really about moving to that zero emissions target that the climate plan, with its chapter on energy, does really reinforce with all of the initiatives that are set out there. I would commend some of the speakers in the National Party to actually read it. Kia ora.

Thank you, Madam Speaker. Well, the ACT Party comes to the House this evening energised to talk about the benefits of regulatory reform. While we support this bill in principle and will vote for it, there is some stuff that you could expect we find unnecessary because the ACT Party is all about targeting legislation and regulation to solve real problems. There are real problems which the regulator and agencies identified, such as allowing provisions for distributors of electricity—we call them lines companies in Kiwiland; the lines that carry the electricity from the substation to your house are the distributors—to be involved in generational retailing. That’s a significant problem that for many years, particularly in smaller communities where they might have a local hydro power station—for example, like down on the West Coast of the South Island or up in Northland, where they have geothermal resources and are in places in remote communities which can rely on solar or renewables, if they want to distribute that electricity to householders, each one of those has to have an individual installation control point number that that identifies the householder.

Now it all sounds very complex; it is overly complex, and what the ACT Party hopes is that by moving the regulation of stuff like that—who gets to carry the electricity from the power station to your house, and should they be allowed to generate electricity and send it down the lines at the same time—if we can move that from the regulation to a code, it should be much simpler for people to get on with actually building generation, delivering affordable energy to people’s homes. The ACT Party agrees that it’s a good idea that the access arrangements for generators and retailers, the regulation of distribution, actually—that there are easy pathways for people who want to produce energy and deliver it to their customers.

But there are some parts of this legislation we don’t agree with. We just don’t think there’s a need for a small consumer advocacy agency. I mean, there’s been no real case made for that through the committee stage that hasn’t been addressed by all of the stakeholders in the industry. This is an industry which has accepted in the past that it hasn’t had good processes to give customers a good customer experience. But they pointed out that hundreds of thousands of customers a year change service provider to look for cheaper rates, better deals, packages that include not just electricity but gas and fibre telecommunications; in fact, that this could be one of the most flexible, customer-friendly electricity markets in the world at the retail level. Yet, there’s nothing this Government and the Labour Party—abetted by their not entirely necessary Green Party supporters here on my left—like more than to create regulations and agencies so they can say, “We’re looking after people; we’re compassionate about their needs. Even though they maybe didn’t get the deal they thought they were from their electricity company and they can ring up another company and change providers just like that, we’re going to set up an agency to look into that and meddle in that relationship between the customer and the provider.” The ACT Party says it’s just not necessary.

But there are some things that are missed from this current Government’s policy. If the stated intention of this legislation is to amend the Electricity Industry Participation Code for the purpose of protecting household and small business customers in relation to relation to their supply, it’s not entirely clear that household and small business customers are at risk of being cut off, unless it’s because of their economic situation. That’s something which this Government, through their tax and spend and tax more and spend more policies, have certainly contributed to an increase in the cost of living and to a wage spiral and a price spiral. That’s called inflation and it’s a terrible situation that this country finds itself in, which is largely at the feet of this Government. This bill doesn’t solve that problem, although it claims to be protecting household and small-business consumers in relation to their electricity supply.

There’s another problem it doesn’t solve, because if we really wanted to make electricity more affordable, to give more choice and to make the system of supply and distribution more efficient, what ACT would say is the Government needs to get right out of it as far as possible. That’s why in our alternative budget, we propose to sell off 49 percent of the State-owned electricity companies that are currently amongst the worst performing companies in New Zealand. They have billions and billions and billions of dollars’ worth of assets and they return a fraction of their value—a fraction of their value—to the Government.

What that means is, for Labour MPs who never studied economics, who never went to university to study something that actually is human behaviour—if we have incentives, this is what people will do. They wouldn’t necessarily understand that by accepting lower dividends and poorer performance from wholly owned State generators, what they’re doing is they’re asking taxpayers, including my kids who work at low-paid jobs to save a bit of money in between lectures, to subsidise the poor performance of these companies, rather than saying, “Well, look, actually, is there private sector funding—hundreds and hundreds of billions of dollars circulating around the world—which could invest in public infrastructure like electricity? Maybe that would free up some Government capital to build things.” Like, we’ve just heard that the Lower Hutt hospital’s going to have to be evacuated because of seismic issues. I mean, imagine. It could free up funds through privatising State-owned electricity generators to build things like hospitals or even complete the scope of works for the Dunedin Hospital.

So what the ACT Party says is this electricity amendment bill does improve things around the fringes. It delegates powers from regulation to a code of practice. ACT thinks that’s a good idea. But what it doesn’t do—what it doesn’t do—is fundamentally change the playing field, which would make energy and electricity more affordable for consumers, for farmers, and for people who live in remote communities who are already having to pay high costs to connect. That’s because it actually doesn’t deliver what New Zealanders need. In the midst of a cost of living crisis, there’s an opportunity to craft legislation that enables a healthy economy and thriving communities. This legislation only goes a fraction of the way towards unlocking the potential that New Zealand has.

So ACT will support this bill, but when we have an opportunity, if the New Zealand people think that we should be part of a future Government, there will be aspects of this legislation that will need to be looked at to see whether they’re actually delivering what the Government says it is, and if they’re not, we’ll repeal it. We’ll repeal it.

💬 Hon Dr David Clark: Sell it off! Going once, going twice!

To respond to Minister David Clark, who suggests that ACT will propose and deliver the partial sale of additional State electricity generators, yes we will, if we have the opportunity to be part of the next Government. We will free up billions and billions of dollars to spend on assets that New Zealanders need us to, like hospitals and schools—vital infrastructure—and we’ll reduce taxes to give New Zealanders a tax break. Thank you.

💬 Vanushi Walters: Can we have some more policy announcements?

The Government members have offered me an opportunity to deliver some more policy announcements. That’s all in our alternative budget. But of course, this is the final reading of the Electricity Industry Amendment Bill so we’ll stick to the rules, and what we’ll say is: ACT will be back for the next one, energised as ever.

Members, the time has come for me to leave the Chair for the dinner break, and the House will resume at 7 o’clock this evening.

Sitting suspended from 6 p.m. to 7 p.m.

Kia ora, Mr Speaker. Thank you so much. Before I start, I just want to acknowledge International Day Against Homophobia, Transphobia, and Biphobia. It’s lovely to be in a Parliament and be in a country where we can commemorate those things and have our flags proudly flying on the forecourt of Parliament. So thank you to this Parliament and to this nation for your support.

But, as this piece of legislation is moving through this evening, it’s been interesting to see the jabs and the gibes, and the to-ing and fro-ing, and a bit of challenge, a bit of fight going on—and that was just between the ACT Party and the National Party on this. They seem to have some little things going on there with each other. So it’s been blissful to watch and to experience this evening.

But this piece of legislation, the Electricity Industry Amendment Bill, is something that, obviously, I was part of—the Economic Development, Science and Innovation Committee—and it was challenging listening to many of the submissions that were made. A couple of times across the floor this evening, it was talked about—why is there a need for a strengthening in the consumer voice; what’s the point of doing that? When at select committee the New Zealand Council of Christian Social Services and when the Salvation Army that comes in and says we need to do this, that we need to make sure that checks and balances are in place to protect consumers, then I think this piece of legislation is fit for purpose.

I’m glad that, as we move forwards to the future—and, of course, technologies are changing, as has been said already in this space. I come from the sunniest city—in the country—of New Plymouth.

💬 Hon Member: Oh no you don’t.

I do. As I get around my sunny city, I think of the needs, in terms of solar and investment in solar, and ensuring the wind and offshore wind, and what is coming—what is already here but what is coming. So I’m glad to support the fact that we’re providing an effective regulatory framework for the electricity industry. And we need to work on—

💬 Hon Members: Regulatory.

—English was never my best subject. But I support this legislation, and I commend it to the House.

Thank you very much, Mr Speaker. I rise on behalf of the National Party and as the member of Parliament for the North Shore on the Electricity Industry Amendment Bill second reading. I must say, listening to the contributions from prior speakers—and very brief many of them have been—I wanted to spend a little bit of time that I have just giving you a little bit of context in regards to where we stand on this bill.

National oppose this bill. I think it’s important to articulate our reasons why we have taken that position, but I think, as we have heard this evening from the Hon Gerry Brownlee before, in terms of the context, that this legislation is built on what would be referred to as a failed review by the Minister. In effect, legislation in this bill is taking us back to the future in regards to where we were pre-2010 and the legislation that was put in place. In effect, this bill will provide unprecedented powers to the Minister over and above the Electricity Authority that is in place to provide oversight in terms of that system. The challenge always, in regards to when the Minister, or any Minister, has the ability to come in and start interfering and overriding in regards to an independent body, is that poor decisions get made.

We’ve been pretty consistent throughout that our view is that the way in which this bill has been amended is going to not lead to the outcomes that are required. National strongly believe that consumers, particularly small businesses and households, should be able to achieve affordable energy costs. It’s critically important in terms of productivity and for economic growth in terms of our industry across the country. But, as we’ve said, giving the Minister the power to be able to set up and, in effect, establish more bureaucracy, while completely aligned in terms of the “modus operatus” of this Labour Government, does not derive value in terms of the people of this country in regards to more red tape, more compliance, and more bureaucracy, and, as a result, more cost on those businesses. Of course, as we know, more cost on business flows through to consumers.

I think one of the aspects of this bill—it was mentioned before—was, I think, clause 11 around the establishment of a consumer agency. Generally, obviously, consumer voice and the input of consumers in terms of co-design and that—I mean, that’s all sensible stuff. But the reality here is another layer of bureaucracy, which will simply only add cost in terms of the consumers around affordable energy. And that’s really disappointing, because Kiwis across this country, particularly the squeezed middle at the moment are really struggling under the burden of cost and the inflationary impacts that have resulted as a result, primarily, of, basically, a Government that is just out of control in regards to its spending and doesn’t seem to have any ability to be able to rein that in. That is a great shame, because what we also don’t hear about is the growing debt in this country, and the fact that my kids and future generations are going to have to repay that at some point. But let’s get back to the legislation, because I can hear the Labours on the other side of the House. They’re getting all a bit boisterous, because they don’t like me critiquing their performance, but, I’ll tell you what, there’s not many that actually are, other than on this side of the House, critiquing their performance.

But the reality of this bill is it’s another example of Government overreach—overreach in terms of a sector that has a number of players within it. As we said, we’ve already got an entity in regards to the Electricity Authority that provides and was put in place as a result of the existing legislation to be able to provide oversight in terms of that sector. And that regulatory independence, which is so critically important from an independent body, does not exist when a Minister starts to dabble in regards to decision making. It is going to be compromised. Compromising the independence of an independent regulator has a significant implication on all aspects of our country, but, in particular, as I’ve said, when you get that conflict, in effect, in play, then that, most of the time, ends in failure and ends in added costs.

I wanted to also refer to new section 44B in clause 19, which is in regards to where the Minister can basically amend the code and go over the top of the Electricity Authority at whim in terms of making changes and stuff like that. So that really takes out any of the independence from that regulatory body. It basically takes away any certainty in terms of that independence, and that is a significant concern, as well, in regards to this. So National strongly oppose this bill.

It’s my pleasure this evening to take a short call and reflect on how this is going to improve the energy market and look after the little people. It’s wonderful to take an opportunity to shout out to the mighty little Lines Company in the King Country. And what they do when they discover that there’s a household that’s struggling to pay their bill, they wrap around that household, and they check in on them, and they find out what’s going on. And they support that household because it’s a really, really good indicator that you’ve got a household that’s struggling if they can’t pay their bills. But not all of the players and not all of the participants in the market, in the energy market, are like that.

I’m really pleased to see that this will strengthen the consumer voice. It’s going to clarify their regulatory powers with regards to the little guy. Those of us who, especially, live in quite isolated communities, we’re quite used to the power going out. We’ve got our good stock of candles, and we’ve got our transistor radios with our batteries in them all set to go. So, you know, we’re really aware of how important it is that the little guy gets looked after in this situation.

It was great to hear from the other side of the House, from ACT, that they supported this bill. I was really excited, and then to hear them say but they didn’t like the bit where we actually looked after the consumer. And the thing about electricity, it isn’t just about the market and efficiency. This is really important stuff and it’s failing. So we need to support everyone who’s involved to do the right thing.

It isn’t just about consumers; it is about communities. And because of this, this bill will help more of the companies to be like The Lines Company. And as a result, I’m very pleased to commend this bill to the House.

Thank you, Mr Speaker. It’s a pleasure to take a short call on the Electricity Industry Amendment Bill, and I’d like to start by giving a little shout-out to a distributer in my region as well: Network Tasman. I must admit that it covers part of my colleague Damien O’Connor’s electorate in West Coast - Tasman and a little bit of mine in Nelson, but, actually, some of us in Nelson are just past the boundary of Network Tasman and we are a little bit jealous, not able to be part of the small distributor of Network Tasman. They do an amazing job, and one of the things they do is give rebates to customers regularly—which I miss out on—and regularly contribute into our community organisations. So it’s an opportunity to give a little shout-out to them, because as the former speaker, my colleague here, Angela Roberts, noted, this bill is around approving competition, particularly for smaller operators in this industry and new entrants as well, to ensure that they can get a fair go.

There are a couple of things in the select committee report I wanted to point to, with the first being that the Economic Development, Science and Innovation Committee did, in my view, an outstanding job. I’d just like to note the work of the chair, Jamie Strange, and other members on that committee.

One of the changes was around ensuring that the Act appropriately reflected the definition of an “industry participant” so that it wasn’t limited as to who may end up potentially having a penalty if they breach the code. The other was around improving some of the enforcement provisions, including increasing the maximum penalty from $200,000 to $2 million, and having penalties as well when people are playing a bit and are playing for time, so that those people would have an extra penalty for every day that a breach continued. So there were some really good changes the select committee made, and I just want to acknowledge the work that they did.

This is a great bill. It’s concerning to hear that the ACT Party wants to sell off our power assets again, and it will interesting to hear whether National supports that or not, but we sure don’t on this side of the House. So I commend this bill to the House.

Thank you, Mr Speaker. It is a great pleasure to rise to speak on this Electricity Industry Amendment Bill in the second reading. As the last speaker from the National side, I feel obliged to reiterate some of the comments that my colleagues have actually very aptly made prior to the dinner break. Sometimes when you’re debating in the House, when someone makes a great contribution, you wish you could actually, like you do in an email, cut and paste. I wish I could actually cut and paste Gerry Brownlee’s speech for mine and pretend that it was mine, because he was so very articulate giving the historical facts that actually led to this legislation and the electricity price review that happened in 2018.

I was listening to Stuart Smith, who very clearly at the outset said, “There are many things in this bill that we actually agree with, but there are things that we do not agree with and that is the reason why we actually opposing this bill.” National strongly believes that—although some of the members opposite have tried to actually insinuate that we don’t support the idea of consumers and small businesses and households being able to get affordable energy and actually making sure that the cost is actually reduced for them, this bill doesn’t actually provide that. And as the Hon Gerry Brownlee aptly said, the competition actually exists in New Zealand for small businesses to actually enter the electricity market. This bill doesn’t actually make it more possible or easier for them, I do not believe, especially during this current economic environment where there is a huge cost of living crisis—and even during the COVID lockdown, many families had to make decisions, make choices as to how they spent their time. For example, for the internet, were they able to work or would they actually provide that option for their children to study? It was a very difficult choice for them. And in this particular instance, there are families with very small margins where there are costs: going to the supermarket the cost of food is actually so expensive, and rising costs of mortgages, and now they’re going to have to think about how they’re going to reduce their costs or how they’re going to meet the cost of electricity.

Luckily, as some members have actually said, we no longer have experience of—you know, years ago when we used to have no electricity and we were actually not allowed to do certain power days. I was actually just watching the news over the dinner break and there was a story about the announcement of a Government subsidy for people to move to electric vehicles (EVs). That led me to think: does this bill actually make people buy more EVs? How are we going to generate more electricity for everyone who owns EVs to charge them at the same time? It actually seems like we can’t do that, especially now that we’re moving into winter. And as I walked into the Chamber, I was going, “Oh, it’s a bit cold. Maybe we need to turn up the heat in this Chamber.” I’m not sure if they purposefully keep this Chamber temperature down to actually keep members a little bit more alert—I’m not so sure—but it seems a little cold today. And I’m just wondering, are we trying to save power charges for Parliament by not actually heating up this Chamber?

But it just makes me wonder whether this bill will actually change any of the behaviour. We definitely support any notion that supports consumers, businesses, and households to actually achieve affordable energy costs in their businesses and in their households. But, you know, this is, as Simon Watts just finished off saying, actually a power grab by the Minister. And the establishment of a new consumer entity—it just seems a bit ridiculous that we already have so many agencies that look after consumer rights, including the Commerce Commission, the consumer protection agencies. So why do we need another agency? It just seems like another bureaucracy after bureaucracy, and that although it says it’s going to be paid with the levies from the businesses, the businesses will often charge the levies that they will have to pay. And who will end up paying for those levies that this agency will be run by? It will be the consumers who will actually pay through the increase in their electricity charges. That is one of the reasons why I do not support this bill.

I look forward to the committee stages where we can actually ask the Minister more questions and, hopefully, make some improvements to this bill.

Thank you, Mr Speaker, and it’s good to be the final speaker on this particular bill, the Electricity Industry Amendment Bill. I go back to listening to the last speaker and the last National speaker, who I share the North Shore with. As you’re driving north on the motorway of Auckland across the North Shore, on the left-hand side is hope, optimism, and action, and on the right-hand side is negativity, status quo, and normality, and that’s what I’m hearing in the House tonight. What I hear from the Opposition is no-action National. They are opposing this particular bill for no particular reason.

What this bill does is it is about ensuring that our electricity is set up for our future—our future generations—and we know in a huge city like Tāmaki-makau-rau that we have to plan now in order to deliver for our future generations. I want to know, based on Mr Watts says, when is it a power grab from the Minister, when this bill is about fairness for the electricity sector and, most of all, for consumers? That is not a power grab; that is enabling people to have their say. They are the consumer, and they deserve that particular right. This bill is about fairness, it’s about ensuring that people get a better say, and it’s about preparing for the future. So without further ado, positively, optimistically, and passionately, I commend this bill to the House.