The Electricity Industry Bill recieved another green light last week – but Labour has pledged to repeal the bill once back in power.The bill contains a suite of electricity sector reforms designed to boost competition, price stability and
The Electricity Industry Bill recieved another green light last week – but Labour has pledged to repeal the bill once back in power.
The bill contains a suite of electricity sector reforms designed to boost competition, price stability and security of supply.
Reforms include a mandatory electricity hedge market, the return of lines companies to the retail market, a $15m fund to encourage customer switching between retailers, and a “virtual asset swap” of Meridian and Genesis power stations.
Green light
A select committee report released last week recommends that the bill be passed with the following amendments:
- Clarification of the rights and obligations of third parties, particularly irrigators, affected by the transfer of Meridian’s Tekapo A and B hydro stations to Genesis.
- Clarification that the asset swap will not affect the Waitaki Catchment Water Allocation Plan, though any acceleration of the plan’s implementation was denied.
- New powers for ministers to alter Waitaki permits if they prove “impracticable” for generators, and extended legal protection for those carrying out ministerial directions.
- Lighter restrictions on lines company activities upon entry to the retail market.
- Further amendments to the Electricity Industry Participation Code, new Electricity Authority mandate, and Commerce Act as affected by the bill.
Most committee members believed that the bill would help prevent substantial electricity price rises, and were satisfied that joint management of the Waitaki hydro chain would not cause a significant loss of water management efficiency.
Damning minority view
In a minority view at the end of the select committee report, Labour committee members reject the bill in both its current and amended forms.
According to the minority report, the bill will not deliver "even on the priorities that the government has set out for itself" and a future Labour-led government will repeal the bill at the "earliest opportunity".
Labour believes the risks associated with the asset swap have not properly been evaluated, including whether the gentailers have the“financial headroom” to withstand the strain of the swap.
Also of concern is whether Genesis has sufficient commercial incentive and technical ability to regulate flow from the Tekapo A and B hydro stations to Meridian hydro stations located further down the Waitaki chain.
The transformation of electricity from public good to “entirely tradable commodity” under the bill will lead to an overall loss of equity and environmental protections, the minority report concludes.
The Electricity Industry Bill is due for second reading before the end of next week.
