Energy Trusts of New Zealand Conference

Greetings

Tēnā koutou, tēnā koutou, tēnā tātou katoa

Ko Megan Woods tōku ingoa

E mihi ana ki te mana whenua o tēnā rohe o tēnā rohe

(Acknowledgements to the mana whenua of the area)

No reira, tēnā koutou, tēnā koutou, tēnā tatou katoa

Introduction

Thank you for the introduction, Richard, and inviting me to speak. Thanks too, to Energy Trusts New Zealand and the organisers of this event.   

It’s great to be here once again amongst an industry group that plays such a pivotal role in the secure and efficient delivery of electricity to New Zealanders’ homes.  

Response to Severe weather events

The severe weather events that marked the beginning of this year served as a stark reminder of the vulnerability of infrastructure that delivers such critical services, as well as the fact we need to be braced for much, much more of it.

The effect of Cyclone Gabrielle was devastating and it took away 11 precious lives. I heard first-hand from some of the flood affected families in Napier how their homes were flooded up to the roofs, forcing immediate evacuations. Approximately 60,000 homes were without power due to the flooding of Hawke's Bay power station. The residents of Wairoa were completely cut off and the only means of communications was through satellite phone. 

I want to thank you for the contribution the sector made during this stressful time. As key players in the energy sector, you came together and demonstrated mahi to help affected customers and restore severely impacted networks. It is notable how staff and resources were deployed from other parts of New Zealand to manage the Cyclone response. Well done and thank you.

It’s not just the climate that is changing.

Rapid advancements in technologies – such as electric vehicles, use of batteries and smart devices – have far-reaching effects for everyone in the energy sector.

The Government’s strategy and targets for decarbonising our economy

Our Government is driven to adapt and respond to the opportunities and challenges from climate and technological change.

Our vision is   for a sustainable future   us,  our children, and  generations to come.

Our aspiration is to have a resilient, affordable, secure, and decarbonised energy system. By 2050, our energy system will be highly renewable, sustainable and efficient, and support a low-emissions and high-wage economy.

Last year, the Government released Aotearoa New Zealand’s first Emissions Reduction Plan to draw together what needs to happen to make a low emissions economy, a reality.

To achieve this, the Government and industry need to continue to work closely together and focus on the issues that matter.

Our key actions in the Emissions Reduction Plan include improving business and household energy efficiency, and reducing barriers to developing and efficiently using electricity infrastructure. This reduces the need for new electricity generation and helps makes energy more affordable.

Increasing the uptake of EVs will also play a vital role in achieving the targets and actions in the Emissions Reduction Plan.

The Government is currently consulting on a draft EV Charging Strategy with one of the focuses to accelerate investment in public EV charging stations. For this we need your ongoing support to grow the network of public chargers across New Zealand. We need you to make best efforts to ensure connection charges are cost reflective and that we have the most streamlined and least cost processes for rolling out new charger installations.

I have received feedback that there are issues that could be hindering scaled institutional capital investment across EV charging infrastructure in New Zealand. So, I encourage everyone to work together pragmatically so we can achieve a nationally consistent approach and achieve the goals of the Emissions Reduction Plan.

Actions on Energy Hardship

You will be familiar with our focus on energy hardship and support to help low-income New Zealanders have warmer and drier homes.

The Winter Energy Payment kicked in again last week, to help New Zealanders with energy costs during the winter months.  

Our Warmer Kiwi Homes programme has so far provided 110, thousandinsulation and energy efficient heaters retrofits. A study by Motu showed that households reported they saved around 16 percent on power bills over the winter months. Their homes are healthier, more comfortable and warmer.  

Many of you in this room are directly involved with Warmer Kiwi Homes making even more of a difference to families lives, by providing top up funding.

The Support for Energy Education in Communities (SEEC) programme which delivers community-level energy education to households that are in need of lowering their power bills and improve the energy efficiency of their homes. The next round of SEEC funding will be opened later this year.

 We continue to implement the recommendations of the Electricity Price Review that looked into whether the issue of affordable and accessible energyTo that end;the Energy Hardship Expert Panel will report back to me at the end of June with  recommendations on policies and actions to alleviate energy hardship, following its consultation.

Power Credit Scheme to support phase out of Low Fixed Charge regulations

In September 2021, the Cabinet agreed to phase out the Low Fixed Charge (LFC) regulations, which was recommended by the Electricity Price Review. The industry advocated strongly for the phase-out of the LFC regulations with the promise that it could unlock more efficient pricing structures, greater benefits for consumers and further our decarbonisation efforts. We have now entered the second year of the phase-out and I have asked industry to do more to promote the positive impacts of this change to consumers.

A key objective of the roll back of the LFC is to bring forward more innovation in pricing tariffs.  Time-of-use pricing is a critically useful lever in the transition we are undertaking, to encourage consumers – small and large – to shift some load away from winter peaks.  I will be watching the distributors and the retailers with interest for how the sector can use some clever pricing schemes to encourage some changes in load profiles.  While at the same time ensuring less well-off customers aren’t motivated to dial down their heaters too low to the extent their homes become unhealthily cold. 

I’m excited by the role tariffs could play in those parts of the country where middle of the daytime is a trough – what smart gadgets, working together with smart tariffs, can the people in this room design and use, to influence when households use their power?

I have seen recent analysis which shows the number of retailers offering plans with a time-of-use component is increasing and twenty-one electricity distribution businesses (EDBs) are now offering time-of-use pricing. This is a fifty percent increase from 2021. Towards the end of this year, MBIE officials will begin conducting a mid-point review of the phase-out of LFC regulations to consider whether it is achieving its policy objectives. I will continue to look to industry to demonstrate, to officials and to consumers, that the benefits from the phase-out of the LFC regulations are being delivered upon. 

We realised that during the phase-out of the LFC regulations, some of the low-use households will experience an increase in their power bills and struggle to pay their bills. So, to help them, the Government introduced the Power Credits Scheme. The $5 million industry-funded scheme opened in June 2022 for households experiencing energy hardship, and who have been on a low-user plan within the last 6 months.  The Scheme has issued nearly $1 million of credits to thousands of customers. This has been an excellent example of retailers and distributors working together to support customers in energy hardship. I applaud all your efforts and support you have provided in making it possible for the Power Credit Scheme to accomplish its aim. Thank you.

Government projects on public and Māori housing

Another key action in the Emissions Reduction Plan was supporting renewable and affordable energy in the communities. $28 million was made available under the Māori and Public Housing Renewable Energy Fund for trialling small-scale renewable technology projects in communities. $14 million of the funding is for Kāinga Ora for trialling solar panels on its public houses and the remainder of the funding is for Māori housing projects.

In May 2022, the Government also announced $16 million over 4 years to support small-scale community renewable energy projects.

The Government Investment in Decarbonising Industry (GIDI) Fund

At the industry level, the Government Investment in Decarbonising Industry (GIDI) Fund provides the much needed funding support to accelerate decarbonisation and optimise energy use by New Zealand businesses. We have just recently announced the outcome of the fourth round of the GIDI programme to decarbonise industry. The co-funded projects across all four rounds are set to reduce carbon emissions by nearly 400 thousand tonnes (391,017 t) of CO2 per year. This is equivalent of taking approximately 145 thousand (144,700) cars off the road – this is more than all the petrol vehicles in Hamilton.

Electricity Market Measures Project

The Government is working to review the Electricity Market Measures to support the transition to a highly renewable electricity system. The transition will be paced in a way that balances the urgency to act with the impacts on our people, homes, and livelihoods. We will be consulting on issues in the middle of the year. This will include ensuring we have the right regulation and policies in place to enable distributors to make investments so they are there when we need them. As well as investing in their physical lines and poles, EDBs will need to make investments in monitoring, and system management to lower costs.

Views on trust ownership

I want to briefly talk about the consumer trusts ownership model. I understand it would be of great interest to you all. The trusts’ model ensures ownership of the local power networks are retained by the community, while also getting the benefits of the stronger commercial focus that came with corporatisation. I think it provides a good balance and a sense of ownership, and that as community trusts you are accountable to the community who you serve. As a Government, we have a level of confidence in the EDBs that they will perform efficiently and continue to serve the interest of the consumers. Overall, the community trusts ownership model appears to have delivered value for the consumers. However, it is always valid to question whether arrangements continue to be fit for purpose – especially in times of significant change.

Final Remarks

Finally, I would encourage you to make submissions to the various Government discussion documents as they are being released and continue discussing your priorities with officials, including raising any challenges you may face, your interests in collaboration and innovation.

As a Government, we recognise that we simply cannot achieve our goals without partnership with the industry, and we look forward to the opportunities to partner further with you all. Together, we will build a more renewable electricity system and achieve net-zero carbon by 2050. It is only through communication that we can build a rapport and work together for the sustainable and prosperous future of Aotearoa New Zealand.

Finally, I would like to close by acknowledging you all once again.

I look forward to the future contributions of your industry and I wish you all the best.

Tēnā koutou katoa