Energy Policy

LABOUR’S VISION

Labour is committed to a secure, affordable and sustainable energy future. New Zealanders need modern, reliable sources of energy that will ensure that our lights will stay on and our businesses keep working. We want to continue to have energy available at affordable prices. This is especially important for older New Zealanders, though all New Zealanders need warm homes in winter months.

New Zealand is on the cusp of an opportunity. As climate change and future oil supply uncertainties start to bite, New Zealand has the opportunity to create a sustainable energy future.

Labour’s Achievements

Over the last six years, Labour has created an environment that will help New Zealand achieve security of supply, affordability and a sustainable energy future. During the last two terms in government, Labour has:

- Adopted a target of a 20% improvement in energy efficiency by 2012.

- Developed the Sustainable Energy Framework so that New Zealand can start thinking about our options for the future.

- Created the Electricity Commission to better manage security of supply, and to ensure the lights stay on even in dry years.

- Ensured that sufficient additional electricity generation has come on stream to keep up with increasing demand, without placing further pressure on security of supply.

- Put a strong focus on getting the best deal for consumers, so people can afford to keep their homes warm.

- Made it compulsory for electricity retailers to offer a tariff with a daily charge of 30 cents per day, so that those who use modest amounts of power don’t have to pay a fortune just to keep electricity connected.

- Established the Energy Efficiency and Conservation Authority (EECA) as a statutory authority and dramatically increased funding for energy efficiency improvements at home and work.

- Successfully renegotiated the Maui gas contract to optimise the remaining supply from that field.

- Changed the oil and gas prospecting rules, making New Zealand an even more attractive place for prospecting, and increased the number of licences issued, to help oil and gas security.

- Begun to create a framework for transmission upgrades that will ensure we can continue to get electricity from where it is generated to where it is needed.

- Introduced price regulation for monopoly lines companies, which is administered by the Commerce Commission.

Labour’s Priorities

ELECTRICITY

Following the establishment of the Electricity Commission, New Zealand’s electricity sector has moved away from the vagaries of the free market of the 1990s. This new ‘managed market’ future will protect security to the standards expected and needed in a first world nation like our own. Secure Supply During our next term in government, Labour will:

- Use the Electricity Commission to monitor supply and demand of electricity and ensure that there is enough backup generation even in dry years.

- Continue the focus on cost-effective renewable sources of energy supply, to augment the 517 MW of renewable energy, including the Southern Hemisphere’s largest wind farm, that have come on stream since Labour came to power.

- Provide investment certainty by introducing a carbon tax of $15 per tonne of CO2 from April 2007. The carbon tax sets a transparent framework for how environmental costs are to be factored into project economics.

- Develop a National Policy Statement to clarify and standardise the rules for transmission investment.

- Retain state ownership of the energy State Owned Enterprises, including the national grid company, Transpower, and the three major electricity generators, Genesis, Meridian, and Mighty River Power. Affordable Electricity During our next term in government, Labour will:

- Continue to require that retailers offer a low fixed charge tariff option to domestic consumers who use less than 8,000 kWh/year, ensuring that they pay less on the low fixed charge than any corresponding tariff option.

- Ensure that the terms and conditions of contracts between domestic consumers and electricity retailers reflect the reasonable expectations of consumers, including:

- Transparency of charge components

- Information on the frequency of billing

- Arrangements for informing consumers of planned outages

- Company-specific arrangements for dispute resolution

- Arrangements for the benefit of low-income domestic consumers

- Ensure that arrangements are put in place to protect consumers who may have difficulty paying their bills on time, including avoiding the cost of frequent connection and disconnection, providing access to budgeting assistance if required, and the offer of pre-payment options.

- Put downward pressure on prices by continuing to improve competition in the wholesale electricity market.

- Monitor the effectiveness of Commerce Commission’s price control regime on lines companies.

- Promote initiatives through the Energy Efficiency and Conservation Authority (ECCA) such as home retrofits and business energy audits – to make heating a home or running a business more affordable.

- Ensure that consumers have access to a free, independent system for resolving complaints about electricity distributors (including Transpower) and electricity retailers.

Sustainable Future

Over the next 10-20 years, most new electricity generation will be renewable. However, some thermal power will be needed in the New Zealand system for the foreseeable future, to allow for the vagaries of New Zealand weather that affect both hydro and wind generation. Meanwhile, research is needed into other options. During our next term in government, Labour will:

- Work towards raising the proportion of electricity generated from renewable sources to 80% by 2020, with 20% from new renewable sources such as wind, solar and fuel cells.

- Increase support for renewable fuel and electricity, and by encourage electricity generators to pursue environmentally sustainable electricity generation in preference to environmentally harmful generation (for example through the carbon tax).

- Explore options for optimising new sources of power, such as wind, wave and biomass, and the transmission issues associated with such an approach.

- Research the possibility of New Zealand meeting all future growth in demand from renewable energy sources, including evaluating the costs, economic structures and system implications of a focus on renewables.

- Develop a long-term road map (National Energy Strategy), exploring a wide range of potential scenarios and creating plans for transition towards a substantially renewable energy powered electricity system.

- Continue to prohibit nuclear power generation in New Zealand.

Energy Efficiency

Saving energy also saves money - affordability and efficiency go hand in hand. Labour will help New Zealand reach the target of 20% improvement in energy efficiency by 2012, and therefore help save consumers money as well.

During our next term in government, Labour will:

- Use the mandate of the Electricity Commission to help progress the 20% improvement in energy efficiency by 2012 commitment.

- Improve New Zealand’s uptake of energy efficient technologies and systems by increasing funding for EECA and projects that increase our energy efficiency through grants, carbon credits and loans. For example, this could include:

- Additional funding for EECA’s loans scheme that helps fund the installation of solar water heaters in homes.

- Further support for EECA’s project to retrofit insulation into low-income homes, so that all houses are fitted by 2015.

- Develop and implement the Ministry for the Environment's Warm Homes Project, which has combined environment/health/energy efficiency gains – getting low-income homes away from energy sources such as coal fires.

- As part of the Warm Homes Project, investigate the possibility of a subsidy scheme to assist homeowners to convert to cleaner sources of home heating and implement energy efficiency measures.

- Make building and home energy efficiency a major consideration for buyers by introducing a Home Energy Rating Scheme.

- Make future buildings healthier, more comfortable, and cheaper to run by:

- Improving building standards to raise insulation levels.

- Simplifying sustainable building.

- Requiring consideration of passive solar design and solar hot water systems, or incorporation of connections for these for future installation. These distributed systems, along with efficient low-emission fireplaces, reduce electricity demand and will be encouraged.

- Continue improving efficiency of large and small appliances by increasing minimum energy performance standards (MEPS) and introducing them for new classes of appliances such as lighting, particularly for appliances primarily used during peak load times.

- Encourage the provision of modern, accurate and informative electricity meters for New Zealand homes, to improve customers' ability to monitor household energy use.

- Ensure it is possible for small-scale renewable energy projects to fairly connect to the national grid.

OIL

Although the date at which world oil production will peak and then begin to decline is not certain, the effects of this decline on our economy and society are so significant that we must be proactive by reducing our dependence on oil, and by contingency planning in case the decline happens before we are fully prepared. While renewable electricity generation capacity grows every year, our transport sector, which accounts for about half of our total energy use, is still almost 100% reliant on oil based petrol, diesel and aviation fuel. Given our small size, remote location and oil import dependency, New Zealand is particularly vulnerable to international supply shocks. During our next term in government, Labour will:

- Set up an interdepartmental working party to work in conjunction with community groups, business and other stakeholders to assess the effects of the peak in world oil production on all aspects of New Zealand society.

- Prepare plans for mitigating the effects of a sustained increase in the price of oil over a variety of timeframes.

- Address issues of security of supply, by holding tenders for additional oil storage to bring New Zealand’s stocks up to the required 90 days supply. This will reduce New Zealand’s vulnerability to short term international disruptions.

- Continue moves toward a more sustainable transport system by:

- Facilitating the introduction of biofuels.

- Encouraging the uptake of efficient vehicles.

- Introducing stricter border controls for imported vehicles.

- Introducing vehicle fuel efficiency labeling.

- Continuing improvements in public transport and traffic demand management.

- Investigating congestion pricing.

GAS

During our next term in government, Labour will:

- Implement the Gas Sector Industry Governance arrangements to provide the regulatory framework necessary to protect the interests of both the people of New Zealand and gas sector participants.

- Ensure that customer switching protocols are standardised and upgraded to ensure barriers to customer switching are minimised.

- Ensure that efficient and effective arrangements are in place for the proper handling of consumer complaints, and that model contract terms and conditions between consumers and retailers are developed.

- Ensure that an open access regime across transmission pipelines is established so that gas market participants can access transmission pipelines on reasonable terms and conditions.

ENDS

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