Electricity Industry Bill passes First Reading

The Electricity Industry Bill, containing major reforms to New Zealand's electricity system, received its first reading in Parliament tonight.

Energy and Resources Minister, Gerry Brownlee, said the Bill contains a suite of changes to New Zealand's electricity system to improve competition and constrain price increases, increase security of supply, and ensure effective and stream-lined governance of the sector.

The Ministerial Review into the electricity market, released in April, found all consumers were paying prices higher than justified by the cost of new generation, with residential customers particularly hard-hit.

There was also a widespread perception New Zealand had a fragile and vulnerable electricity supply system, and there were a number of concerns about the current governance arrangements.

Key initiatives in the Electricity Industry Bill to beef up competition, increase security of supply, and improve governance, include:

• Transferring Tekapo A and B power stations from Meridian Energy to Genesis Energy, and transferring the government-owned Whirinaki station to Meridian Energy;

• Requiring all major electricity generators to put in place an accessible electricity hedge market;

• Establishing a $15 million fund over three years to promote customer switching between retailers;

• Requiring generators/retailers to compensate consumers in the event of conservation campaigns or a dry-year power cut;

• Abolishing the reserve energy scheme; and

• Abolishing the Electricity Commission and replacing it with a slimmed-down Electricity Authority, with far fewer objectives and functions than the current Commission.

"Competition is vital in order to constrain future price increases for Kiwis. I've often said no government can promise to lower the price of electricity - but what we can do is make sure our policy settings are as good as possible to constrain future increases and promote competition, efficiency and choice," said Mr Brownlee.

The Bill has been referred to the Finance and Expenditure Select Committee for consideration.