Ministerial Statements — Northland Power Outage—Electricity Authority Report

Mr Speaker, I seek leave to make a ministerial statement.

SPEAKER: Good.

Hon SIMEON BROWN: I wish to make a ministerial statement following the release of the Electricity Authority’s report—

SPEAKER: Just one moment, Mr Brown. Can we check the microphones; the sound is not tidy. OK, you’ll be fine now.

Hon SIMEON BROWN: Thank you. I wish to make a ministerial statement following the release of the Electricity Authority’s report into the Northland tower collapse on 20 June 2024. The Northland tower collapse caused immediate disruption and left 88,000 Northland residents and businesses without power. The economic consequences were vast. Businesses were unable to operate, and households faced disruption to their day-to-day lives. The report identifies a range of estimates between $37.5 million and $80 million of lost economic activity for Northland, and that without distributed electricity generation, it would have meant this figure would be even higher.

As expected, the report found the removal of the nuts on the tower’s base plates led to the tower’s collapse. The report also found that the underlying factors that contributed to this meant that the tower collapse was entirely avoidable. The report details an over-reliance by Transpower on service providers to ensure that critical assets are maintained. It also found that the identifiable risks were missed, including concerns that were raised internally. The report recounts how concerns were raised by a senior engineer within Transpower in 2021 regarding a gap in the knowledge of maintenance crews undertaking foundation work, but that the recommendations for improvement by Transpower were not acted on.

Transpower failing to act on these opportunities has led to terrible consequences for the people of Northland, and the report also identifies that the removal of all the nuts from the base plates from more than one tower leg was not a one-off event. Put simply, the report highlights that Transpower did not have the appropriate processes, assurance protocols, and training guidelines in place to prevent this from happening or to ensure the board of Transpower had appropriate oversight over the maintenance of some of its most critical infrastructure.

The report also found that the restoration of power after the tower collapse was carried out quickly, safely, and efficiently, and highlights the importance of distributed generation. Distributed generation was able to meet 45 percent of the peak demand, meaning that many customers could get up and running shortly after the tower collapsed. Without distributed electricity generation, the economic cost to Northland would have been far greater. The Electricity Authority estimates that having access to that distributed electricity generation saved Northlanders at least $26 million.

The report recommends a review of the rules which limit the amount of power that can be generated by electricity distributors, and the Government has already announced that we’ll be easing the restrictions that currently exist on electricity distribution businesses so they can increase electricity generation and bolster regional resilience. Details will be confirmed by Cabinet later this year.

The report identifies incredibly concerning findings and identifies 26 recommendations, including recommending that Transpower improve processes for maintenance work for base plate refurbishment and ensure that contractors are more appropriately trained, recommending that Transpower require its service providers to review and revise their work procedures for base plate refurbishment to ensure they align with technical specifications, recommending that Transpower ensure regular reporting and escalation of non-compliance by service providers to the Transpower board so that effective governance and oversight can be exercised, and recommending that the Electricity Authority develop options to amend the electricity code to allow for more regional resilience through distributors being able to generate more on their own networks. These recommendations are concrete steps for Transpower and the Electricity Authority to improve processes to ensure that an event like what happened in Northland does not happen again. While this report can’t fix what happened on 20 June, the report does highlight key changes that can be made to ensure that critical infrastructure, such as transmission pylons, are managed and maintained appropriately.

This event was entirely preventable, and Northland has paid the price. The Government will be working with the Electricity Authority as regulator to ensure Transpower implements the recommendations from this report. Cabinet has also agreed to change rules to allow for more generation of electricity to be made at the distribution level to increase resilience for local communities when power is cut.

I want to thank the Electricity Authority for this report, and the work of the review’s independent chair, Sarah Sinclair. The Government looks forward to these recommendations being addressed and implemented promptly.

Thank you, Mr Speaker, and thank you to the Minister for Energy for bringing this report to the House’s attention and allowing time for some discussion on it.

Labour supports the recommendations that are in this report, and I too want to thank the Electricity Authority and the independent chair Sarah Sinclair, who has carried out this review. I think there is not a single person in this House who thinks that what happened is something that is desirable in our country. When we have a series of recommendations in front of us about how this can be avoided in the future, ranging from the structure of our electricity market, how we can have our electricity distribution businesses (EDBs) move more into generation, right through to what the oversight of maintenance contracts look like, I think it is a report that needs to be taken seriously.

I do have a couple of questions that I’d be interested to hear the Minister’s response on. The report does some work analysing what the cost to Northland was from this event. I just have a question to the Minister, which is whether or not the Government is considering compensation and whether that will be provided to affected businesses and residents, and whether that is something that is being actively pursued by the Government.

I thank the member the Hon Dr Megan Woods for her contribution. In relation to the question around compensation, ultimately, the answer to that question is that that is not a matter for me but, ultimately, it’s a matter for Transpower. The reality is that, as the report shows, Transpower has failed Northland, and the next steps in terms of what they decide to do are matters that Transpower must take into account following this report.

Thank you, Mr Speaker. Is this a matter that the Minister will be raising with the chair of Transpower?

It is a matter that I have already been in discussions with Transpower over, in relation to what response they will have for the Northland communities.

Sorry, but, for clarity, Mr Speaker, what I was asking the Minister about is the matter of compensation and whether that would be paid. I wonder if the Minister could update the House, then, on what the nature of the conversation with the chair of Transpower was and what the options on the table around that are.

Well, the reality is that under the code, there’s no requirement for compensation in these instances. There have, obviously, been conversations in relation to how Transpower can recognise their failure, and those conversations are ongoing.

Sorry, Mr Speaker, I am still unclear from the Minister’s answers exactly what the nature of the conversation around compensation was and what the parameters of that conversation were. I would just be interested to hear from the Minister about, and for the House to have more understanding of, how broad ranging that conversation was.

The key point here, in relation to this review, is that the issue of compensation was outside the scope of this review. I think the report does identify that there was a miscommunication by Transpower in relation to the issue of compensation. As I’ve already outlined, compensation is not something that is required under the electricity code, but there have been conversations with Transpower in relation to how they can recognise their failures, and those conversations are ongoing. But, as I would say, those are not issues that I can decide upon.

Thank you, Mr Speaker. Has the Minister discussed the issue of compensation with Cabinet colleagues or at Cabinet or a Cabinet committee?

I don’t discuss what happens at Cabinet.

In my brief read-through of the broad range of recommendations in the report this morning, one of the things that I do note is that the Electricity Authority’s report, led by Sarah Sinclair, has not only come back with mentions of distributed energy and looking at how it is that we can allow our EDBs to generate more, but I also note that in the foreword of that report, Sarah Sinclair makes the comment that she hopes “that the recommendations in this report will translate into better outcomes for Northland, and for all electricity consumers in New Zealand, all of whom depend upon a safe secure electricity system to live, work and play. The reliable supply of electricity in every region is crucial. I hope, too, that [the] report helps foster industry cooperation in [investigating] the rapid changes the electricity system is undergoing, much of it driven by changes in technology. The move to more renewable generation, such as wind, solar PV and batteries, and a rise in distributed generation requires co-operation to plan”.

My question for the Minister is: has the Minister discussed with colleagues changes that will be made to increase the uptake of those new technologies, such as solar PV and batteries and more renewable energies?

Well, yes. In fact, this Government has made a number of announcements in relation to renewable generation and increased renewable generation. One of those is the fast-track legislation, which is critically important to ensure that we can have more generation approved faster. Secondly, as I mentioned in my statement, the Government has already decided that we are going to ease the restrictions on generation by electricity distribution businesses, and Cabinet will be making decisions on that later in the year. Of course, we’ve also announced the decisions around Electrify New Zealand, which is about making changes to the Resource Management Act processes so we can have more of this generation capacity actually built faster.

My question to the Minister, then, is: how many new distributed energy projects have been facilitated under the Government’s fast-track consenting regime?

Yeah, I think that that question is well outside the scope of the particular report. But, in relation to the recommendation, which is to allow for more distributed generation—and actually changing the rules to allow for it is something that Cabinet’s already agreed to. This Government has agreed to it; the previous Government didn’t.

SPEAKER: Yeah, in these exchanges, the scope is broadened by responses.

Thank you, Mr Speaker. I just wonder if the Minister can update the House with what the time line for implementation of the recommendations will be, what we can expect to see this year, and what the ongoing work streams will be. There are a large number of recommendations there.

I think one of one of the recommendations is that the Electricity Authority will be getting a six-monthly report from Transpower in relation to the implementation of all of the recommendations, and I expect to be fully engaged in that process.

Thank you, Mr Speaker, and thank you for the opportunity to respond to the ministerial statement on the Northland transmission tower collapse report. I think it is really important that the practicalities of the energy transition are understood and appreciated by decision makers, so I welcome the statement from the Minister for Energy, who hasn’t really been particularly active in the energy space to date—[Interruption]—except if we think about fossil fuels—[Interruption]

SPEAKER: That’s enough, thank you.

SCOTT WILLIS: —because the energy crisis is not just some bolts missing and some poor processes at Transpower; it’s also a bigger picture of systemic underinvestment, underinvestment in renewable electricity generation. That’s the result of successive Governments’ unambitious decisions, including this one’s to continue to rely on harmful, uncertain, risky fossil fuels—[Interruption]

SPEAKER: I’m just going to stop the member there for a minute. Look, all the barracking—his time should have stopped as well, I don’t know what the story is there. All the barracking in the world is not going to end up with somebody else on this side of the House getting a speaking opportunity. Just listen, even though you may not agree with what’s being said, with some respect.

SCOTT WILLIS: Thank you, Mr Speaker, and certainly I appreciate that the Minister will take this report to help put more attention on the energy portfolio, because the tyranny of fossil fuels is costing us $10 billion a year when we can have clean, renewable energy. And what this report does do is highlight the importance, as the Minister has correctly stated, of distributed electricity, distributed renewable energy, something that is really dear to my heart. Work to fix the broken electricity market will help liberate all of those underutilised distributed energy resources. It’ll stimulate new renewable electricity generation. It’ll help provide resilience to our communities.

As the report indicates, there are massive gains to be made. There are cost savings to be made from prioritising distributed energy resources. And that’s when we add flexibility. We can take things even further, because no one really benefits when there’s no consensus around infrastructure, and other similar-size countries have managed to build infrastructure—nation-building infrastructure—through successive Governments. My letter to the Minister on the 17th of this month to meet to discuss how we can work on the energy transition together is, in all seriousness, an important request to let us work across the House to fix our broken electricity market. Let’s try and find the solutions together, because we have got a real, urgent need to fix the problems that we see.

We’ve had the Resource Management Act reform Minister, Chris Bishop, reveal that the six-month deadline for a new national policy statement for renewable electricity generation has been missed, and that would have required councils to issue consents for renewable power generation within a year of application. That’s been missed. That’s been missed because there’s been the mistaken focus on fast-track legislation, when we already have—

SPEAKER: Can I just ask the member to come back to the ministerial statement. It’s not an opportunity for a policy statement.

SCOTT WILLIS: Thank you, Mr Speaker, for the reminder. Let’s see, one of the recommendations is that the Electricity Authority develop options to amend the electricity code—which is good; we know that the code needs amendment—but to allow for more regional resilience through distributors being able to generate more on their networks.

Now, my question to the Minister is: why should electricity distribution boards be able to own generation? Why should that fall to them rather than merchant generators, rather than the call from 350 Aotearoa, from the Community Energy Network, for community-owned energy assets, rather than the call from so many people around the motu to democratise our energy system? Why are we simply allowing the electricity distribution boards to own further generation? Is there another way that we can work on this to ensure that merchant generators can function? I’ll sit down and allow the Minister to answer.

Point of order. Sir, can I direct your attention to Standing Order 365.

SPEAKER: Just a moment—I’ll have a wee look.

Hon SHANE JONES: Yeah. You know as well as I do, sir, that questions have to have some faint connection with the ministerial statement. And talking about the democratisation of power, or whatever relationship it might have with the Soviet Union, hardly cuts the mustard.

SPEAKER: Well, that might be the member’s opinion—it’s not how I see it. The ministerial statement talked extensively on the reliance that was placed on distributive electricity during the crisis as a result of the extraordinary removal of bolts from the tower. I think reflecting on how that might expand a little bit more in a comment on a ministerial statement is not out of order. Are there any other statements about this?

I’m happy just to briefly address them. Well, I just thank the member for his contribution. Ultimately, the report has made some recommendations regarding distributed energy—this Government’s open to that. There’s a range of different types of distributed energy which need to be enabled—we’re open to that—but we also need to make sure we’ve got the ability to consent large infrastructure, which is why we have fast-track consenting.

Thank you to the Minister. We do know that more can be done, and we look forward to working with the Minister. And I welcome a response to my letter. I hope we can work together.

Thank you, Mr Speaker. Thank you, Minister, for your fulsome statement. I also want to thank Sarah Sinclair, who is a well-respected infrastructure governance professional; Transpower should listen very carefully to the recommendations in the report that she’s provided, and they should accept them and implement them.

Now, before I ask the Minister for Energy a few questions, I just want to point out that the comments we’ve heard from Labour and Green Party contributors today have been surprising, because, for the last six years, a Government led by Labour was in charge of the Government’s electricity assets, so it’s a surprise to me that they are surprised about the events that have occurred. In fact, I think it would be helpful if Labour and the Greens stayed as far away—

Ricardo Menéndez March: Point of order. I refer to Standing Order 365. Comments and questions about ministerial statements must be: “(a) comment on the ministerial statement: [or] (b) [to] ask questions to the Minister who made the ministerial statement, to elucidate more information [on] it.” It doesn’t say anything about the comments from previous contributors to the debate.

SPEAKER: No, it’s very hard to imagine that, in a debating chamber, a comment that’s made from the floor about a ministerial statement might not be referenced in a future contribution, but I would ask the member to try and confine himself a little bit more to the ministerial statement.

SIMON COURT: Thank you, Mr Speaker. The Speaker is right. This is not a safe space for sensitive ears.

Transpower’s failure has led to losses estimated between $37.5 million and $80 million to the Northland economy. They are not just numbers; they are people who went to work and couldn’t work. They are people whose homes were dark and unheated. They were large-scale manufacturers employing hundreds of people who couldn’t produce products, had trucks parked up, and couldn’t fulfil orders. It is a real material hit to the Northland economy and to the people of Northland who depend on reliable infrastructure.

Now, one thing that I reflect on is that electricity distribution companies, commonly known as lines companies, transitioned largely into community or private ownership, Minister, back in the 1990s and since. Having that private sector involvement at governance level, at senior management level, private sector skin in the game, private money; actually, even our super funds or our local communities’ trust funds—skin in the game—means that the electricity distribution companies, the lines companies, have a very good track record of keeping the power on and restoring services. That is because they make it their business to make sure that they listen to their engineers, they train their workers, and they keep the lights on and the power flowing to the businesses and homes that need it.

So, Minister, is it time to consider whether an asset 100 percent owned by the Crown, like Transpower, actually needs to be 100 percent owned? When we look around at the model, say, for Genesis and Meridian and some of the other mixed-ownership model power companies, it turns out that they’re quite capable of generating electricity without being 100 percent owned by the Crown. My first question to the Minister is: does he think this is a good time to look at whether having private sector governance and, potentially, private sector capital involved and having skin in the game in Transpower is a good idea?

Well, I don’t think that was the key focus of this particular report—this report was focused in regards to the events of 20 June. The Government’s response now is to ensure that the board of Transpower takes accountability and ensures they implement all of the recommendations to ensure security of supply.

Thank you, Mr Speaker—

Hon Kieran McAnulty: Point of order. Thank you very much, Mr Speaker. Speaker’s ruling 150/1 requires Ministers to address the question. Now, you are the sole adjudicator as to whether a question is relevant; you did not say that it was irrelevant. The House deserves an address to the question as to whether the Minister supports privatisation.

SPEAKER: Yeah, see, I’m trying to be fair to all. The Minister was asked about compensation from the member’s own party, where, in fact, the Minister had said on three occasions that he had no responsibility for that. That was outside of his ministerial statement. Mr Willis asked about distributive generation law changes that might come to facilitate that—I think; if I’m paraphrasing a little bit. That is outside the ministerial statement. I felt it would be rather unfair to Mr Court when he asked a question of the Government he is a part of about what the future policy position might be. I think what the Minister has said is that there is another forum to discuss that—if I’m paraphrasing.

Hon Kieran McAnulty: Speaking to that. Just for absolute clarity: I’ve got no issue with the question; I just want to know what the answer is.

SPEAKER: I’m sure there’s a lot of people who would love to know the answer to that.

Scott Willis: Speaking to the point of order.

SPEAKER: Ugh. Speaking to the point of order.

Scott Willis: Ha, ha! It’s not my desire to cause the Speaker any pain in this point of order. But, simply, distributive energy is in the report. I contest that I was making a point that was related to the—

SPEAKER: I didn’t say you weren’t. Don’t be so sensitive. I was simply saying that I’m trying to be fair to everybody here. Mr Court, the Hon Simeon Brown has answered; do you want to finish your contribution?

SIMON COURT: Thank you, Mr Speaker. Very briefly. Now, I noticed that the report shows that concerns were raised by a senior engineer in 2021 at Transpower regarding a gap in the knowledge of the maintenance crews undertaking foundation work but that the recommendations for improvement by Transpower were not acted on. Does the Minister have any concerns that, at this time, in 2021, Transpower had signed up to a voluntary climate leaders coalition where they were going to voluntarily measure their carbon emissions and talk to all of their staff about climate, have a whole lot of whiteboard sessions on climate—

SPEAKER: Yeah, that’s good. Do you think you could narrow it up just a little bit closer to the ministerial statement?

SIMON COURT: Mr Speaker, this is material. Was Transpower spending enough time focused on engineering and safety, rather than actually attending all of these voluntary climate coalition sustainability conferences and so on, and will the Minister be directing the board of Transpower to actually focus on their core business?

Well, I would say that the report is very clear as to what the priorities of the Transpower board should be. My expectation is that they will implement the recommendations from it. I will be working with the Electricity Authority to ensure that they are and that they’re being appropriately held to account.

In regards to the final question in relation to the specifics around the board, that’s a matter for shareholding Ministers, which are the Hon Paul Goldsmith and the Hon David Seymour.

I’m just wondering if the Minister could enlighten the House and listeners as to what additional policies he might be considering that will help actually get more generation built and more transmission built faster, navigating the labyrinth of the Resource Management Act, so that we can actually get more generation and transmission up.

Well, this Government is delivering fast-track legislation, and that is critically important. I say to all members of this House, if you want to see more generation, more distribution, and more transmission, vote for fast track.