Electricity Industry Bill
Tuesday 15 December 2009; 9.20pm
Hon Dr Pita Sharples, Co-leader of the Maori Party

There used to be a bit of a smart catch-cry in New Zealand, "Will the last person to leave please turn out the lights?"

Well over the last couple of years, the lights would probably have been replaced by a candlestick.

Why? Because there has been a massive 65 percent increase in electricity in the last decade while in the same space of time, there has been a 34 percent increase in inflation.

So one does not have to be an accountant to work out that electricity prices have increased at almost twice the rate of inflation (31.09% difference).

For many of us in Aotearoa, the context of electricity will be forever traumatised by the death of South Auckland mother Folole Muliaga, hours after the electricity supply was disconnected to the family home.

Although the Ministerial Review of the Electricity Market 2009 suggest that a large part of the increase in electricity prices over the last decade is justified, prices to some customer groups – especially residential households – have risen faster than justified by generation cost increases.

And these things cause us particular concern in the context of the low income families, so many of whom are Maori.

So when we learn that the Consumer’s Institute is supportive of the Bill; it has to give us good heart.

As a party, the Maori Party has fought consistently to address the situation faced by low income families, simply struggling to survive.

What we know, is that Māori households tend to spend more on electricity and liquid fuels than non-Māori, and they also a greater share of their total weekly spend on such items.

When we entered into negotiations around the emissions trading scheme we became aware that while a greater impact on Māori households can be predicted for ETS-related electricity price rises, this is possibly not the case in respect of liquid fuels, given that more affluent Māori households tend to spend a relatively higher share of their weekly spend on fuels than do other Māori and similarly affluent non-Māori.

This raises a possible case for greater targeting of support to households for ETS-related rises in electricity prices.

And so we were delighted to achieve a fifty percent increase to electricity for two years, as part of Maori Party support for the scheme. What this translated into was a five percent increase in electricity instead of a 10% increase; and in the pocket that meant a saving of approximately $1.80 per household per week.

It all adds up – but as always – we will not be satisfied until we can come to the best possible arrangements for our people.

This Bill disestablishes the Electricity Commission, instead setting up an Electricity Authority– with a very specific pro-competition focus.

So how exactly will that benefit Maori?

We are optimistic that the Authority can promote the benefits to consumers to compare/switch retailers.

There is also a specific provision of a five million dollar per year fund to set up to facilitate consumer switching. While this is positive, we do wonder whether the $5 m/year fund to facilitate consumer switching might be better spent educating New Zealanders on how to consume less rather than how to switch companies.

I want to return to the broader aim of the Bill which is for electricity regulation to improve competition in the electricity market and to improve the security of electricity supply.

The purpose of the bill is to increase competition to keep price rises down –particularly in the retail market for residential customers.
We are unaware, that there is some uncertainty that the provisions of the bill will be able to achieve the purpose of the Bill – which is to increase competition.

Some electricity companies are saying that the asset swap creates uncertainty and risk, creating reluctance for companies to expand nationally; others are supportive.

Another important question we have is whether the increased competition will actually facilitate the minimizing of electricity retail price increases; that households will only face necessary price increases - given the corporate model of electricity supply.

Will it simply be as ineffective as switching between petrol companies?

We are aware that customer switching can affect change and keep prices down, such as with the situation with Contact Energy in 2008 when they wanted to raise prices considerably (including to cover increased directors fees).

They lost more than 40,000 customers in a short space of time, much more than the average amount of switching that goes on – which is about 23,500 in an average month, sector wide (12.5%), and includes those moving house.

Significantly, we are mindful that the ability of the Minister to regulate on price is being removed via this Bill. While the Bill allows Minister to make regulations relating to fairness issues for consumers – which is all very good – in many ways this is simply playing with the various chess pieces on the Board.

For the provision is necessary as fairness is no longer an objective of the new Electricity Authority as it was for the Electricity Commission.

The bigger picture, however, is energy conservation and investing in sustainable energy – two objectives of the Electricity Commission not transferred to the new Electricity Authority.

In many ways then, the amendments the bill make to the energy sector as a whole could be said to be in the wrong direction. It does not address growing energy demand or facilitate roll-out of renewable energy generation.

This is one of the key issues that we will be seeking to receive further wisdom on, at the select committee stage.

There is a need to continue to invest in sustainable energy generation, and to do so within a sustainability framework – given that electricity prices will continue to increase with oil price increases, and that electricity production is going to come with an increasing carbon price tag attached.

We are really interested in the range of options our people are currently exploring – the establishment of “micro grids” for rural communities (consisting of small scale wind, solar, micro-hydro, and anaerobic energy systems) while also maintaining a connection with the national grid – this will both lower costs and improve security of supply.

Finally I return us to the global landscape, and I call on the wisdom of those who attended the Indigenous Global Summit on Climate change, Anchorage Alaska 2009.

The Anchorage Declaration that arose from that summit concluded, and I quote:

“We are experiencing profound and disproportionate adverse impacts on our cultures, human and environmental health, human rights, well-being, traditional livelihoods, food systems and food sovereignty, local infrastructure, economic viability, and our very survival as Indigenous Peoples”.

There are many key issues impacting on our people around electricity use.

The Maori Party has always sought to promote the development of renewable energy sources, including wind and solar in order to protect and preserve limited resources such as oil, gas and coal.

We have many questions that still require further discussion about this Bill –but we believe the basic premise is certainly worth supporting.

So we vote in support at this, the first reading, and we look forward to the evolving debate.

ENDS

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