New Zealand Parliament Pāremata Aotearoa

Electricity (Disconnection and Low Fixed Charges) Amendment Bill — Second Reading

Published date: 8 Pae 2008

This page displays your selected transcript. You may view the recorded PTV video using the "Video" tab. Please note that the video tab displays all available video for the sitting day of the transcript. A filter will be available to find the specific debate / speech you wish to view.


Electricity (Disconnection and Low Fixed Charges) Amendment Bill

Second Reading

  • Debate resumed from 19 March.

PHIL HEATLEY (National—Whangarei) : The National Party has been supporting this bill to, and through, the select committee. The bill ensures that the Government can regulate the content of voluntary disconnection guidelines that the Electricity—

Hon David Parker: It’s been to select committee.

PHIL HEATLEY: That is right. We supported it being referred to the select committee, we supported it coming out of the select committee, and we continue to support it through this House.

One of the issues we raised during that time was what Helen Clark herself said—this was all brought about, members will recall, by the Mercury Energy debacle—that Mercury Energy was in breach of the social responsibilities written into the existing law under which State-owned enterprises operate. Why then was there a rush by Labour to further regulate? We knew at that time that Labour was cultivating the perception that the law is loose and needs changing, but in reality Mercury Energy and its board should not have been let off the hook that easily.

This was a reaction that the Government took to an incident that either it should have known was going to come over the hill in a widespread way, and therefore fixed it, or it should have recognised that it was a one-off incident that does not require further onerous regulation. None of those questions were asked at the time. Essentially we had a family put in a tremendously difficult situation, and the Prime Minister had to front up and say she would pass more regulation. There was no thought put into it at all.

The bill went to the Commerce Committee, and members worked hard to improve it—National members certainly did cooperate. The bill has now come out of select committee, and we are happy to support it. But we were anxious about the ease and speed at which this Labour Government decided that regulation and more legislation would fix the problem. That is its reaction to everything: if it moves, regulate it; if it moves again, tax it. We cannot run a country like that because it simply grinds everyone down. It grinds them down with the costs, and it grinds them down with the paperwork.

But the select committee members, as I say, have improved this legislation to a point where we are happy to support this bill now, and I let the House know that the National Party will be voting for it. Thank you.

Hon DAVID PARKER (Minister of Energy) : I rise to speak in support of the Electricity (Disconnection and Low Fixed Charges) Amendment Bill, and I thank National members for their indication that they are going to support it. The bill has two main parts. The first relates to amending the definition of “low-use consumer” for the purpose of the low fixed-charge tariff option. I would not want to overstate the benefits that that tariff option confers upon low users of electricity who can opt for a lower fixed-charge option. Rather than choosing a higher fixed-charge option and lower variable costs, those electricity users can chose a low fixed-charge option and higher variable costs for the electricity that they use, where that is to their benefit.

The rules as they are now—before this bill—confer additional benefits to the areas in the country that are warmer and as a consequence do not have to spend as much on heating as colder districts. The effect of that, for example, is that more Auckland consumers, on average, benefit from the low fixed-charge option than Invercargill consumers, notwithstanding the fact that in some ways the Invercargill consumers need the low fixed-charge option more because they live in a colder part of the country and therefore have to spend more, on average, on heating, and they have higher electricity bills. It is rather unfortunate that the rules as they currently stand apply the same threshold for the low fixed-charge option across the country and do not differentiate between different parts of the country based on average use that reflects how cold it is in different parts of the country and how much people have to spend on electricity.

This bill fixes that problem by creating more than one region within New Zealand for the purposes of the low fixed-charge option. It creates a regulation-making power under the legislation, the Electricity Act 1992, which enables regulations to be promulgated that have that effect, so that we have more equity in terms of the operation of the low fixed-charge option between Auckland and Invercargill, to use the example I just referred to. This will be of benefit to low-quantity electricity consumers. The threshold is currently 8,000 kilowatt hours throughout New Zealand. That threshold will, in due course, be lifted for some parts of the South Island where the low fixed-charge option is currently unavailable to some people, because most people use more than 8,000 kilowatts an hour, which is the threshold. Most people in Invercargill would use more than that because it is colder and, as I say, they have to use more electricity to heat their houses.

There are some other minor alterations in the bill. There is a power for the Minister to grant exemptions from the low fixed-charge option. This provision is directed to small, isolated networks that are not connected to the national grid. For example, on some of our offshore islands where there is a very small pool of customers paying for the network, the cost of servicing those customers can be higher than is the norm for the larger grid networks in other parts. The provision enables those who are running power systems in those isolated areas to have an exemption from the low fixed-charge option, because it is not practicable or fair to apply it in those areas.

The other change that is made under the Electricity Act is that regulations can now be made to protect vulnerable consumers from inappropriate disconnection. We had the terrible situation last year where mistakes were made that led to the disconnection of someone who was in need of electricity for medical support, and that is a situation that I do not think anyone wants to see happen again. At that time the Government found that it did not have a regulation-making power that would have entitled the Government to fix the situation; we were reliant upon voluntary efforts on the part of the electricity companies. The electricity companies, in fairness to them, have responded very well, and unnecessary disconnections have decreased as a consequence of their looking again at what their rules and procedures should be surrounding disconnection. The electricity companies have done this under the guidance of the Electricity Commission, which has developed guidelines that electricity retailers until now have adopted voluntarily. We were in the position where had that voluntary agreement not been secured, we would have lacked the legislative power to fix it.

Despite the fact that most people in New Zealand realise that it ought to be within the power of Governments to require electricity companies to do things in a certain way, we did not have the ability to require it. Now it appears that these powers will not be needed to be used in the near future, but it does seem responsible that the Government has these powers. If, in the future, regulations are necessary to protect vulnerable consumers who might need electricity to maintain electrical devices they need for their health, for example, it seems appropriate that the Act should include regulation-making powers to enable the Government to make those regulations.

I thank the Commerce Committee for its consideration of the bill, and I thank the other parties who are going to support it. The committee was unanimous, I note, in its report back, and the only change made to the bill was a minor one. I look forward to the passage of this bill. Thank you.

Hon DAMIEN O’CONNOR (Minister of Tourism) : I will take the opportunity to speak briefly on this bill, which I think is very sensible legislation and another necessary piece, I guess, in putting Humpty-Dumpty back together again. I acknowledge the efforts of my colleague the Hon David Parker in the part he has played, because the reality is that when Max Bradford deregulated the electricity industry, Humpty-Dumpty fell off the wall. Since that time we have been trying to put him back together again so that we have a fully integrated energy system, delivering reliable electricity to people up and down this country. There were investments over decades and decades to have an integrated system, but of course that was all thrown to the wind by the National Party.

Mr Heatley, who spoke just before, clearly identified the tried and disproved theory that the market will deliver to everyone. Well, the fact is that it will not, and in electricity in particular we need to protect the integration, the coordination, and the cooperation of all participants to make sure that when we turn the switch on, the lights will come on as well—particularly for those consumers who rely on it.

This bill, as my colleague said, does two things. It strengthens the regulation-making powers, if needed, to ensure that the disconnection practices of electricity retailers adequately protect the needs of vulnerable customers—people who are relying on electricity for their lives, in effect. In the tragedy last year in May—where I am sure the electricity retailer had no intention of causing harm in any way, but the cold hard market reality of disconnection applied because bills were not paid—we saw, unfortunately, the death of a New Zealander. We do not want that situation to continue and I think it is good that we have legislation that allows these regulations to be made. It does not impose them; it just allows them to be made.

The next component of the bill is something I have some knowledge of, in coming from the West Coast. We are fortunate that although we live in a mild climate it does not get freezing cold, but there is the need for energy and many constituents have access to coal. So over those winter periods they have used relatively small amounts of energy. They are superannuitants and they are beneficiaries, for the most part, and they watch every penny because they have to—and good on them.

The bill raises the threshold of the low fixed-charge eligibility so that it allows them to use not 8,000 kilowatt hours but up to 9,000 kilowatt hours, on average, below which they will be entitled to a low fixed-charge regime from the retailer. That means there is an incentive for them to use less power, and they will not be penalised adversely as they were in the past.

Shane Ardern: They’ll get taxed for greenhouse gas emissions.

Hon DAMIEN O’CONNOR: Again, it identifies the need for the Government to intervene through regulation, through guidance, in a way that the National Party, I tell Mr Ardern, would not have any idea of. He still thinks that the market will deliver to him and his farming mates. But they know well that they need some guidance from time to time. They need guidance from time to time, and regulation, to ensure we have a good sound economy that will not run off the rails.

This bill is necessary to take us one step further down the path to try to reconstruct a fully coordinated energy system that provides the right incentives for energy efficiency, and that allows people to come in with new ideas, but that protects consumers and businesses from the rorts that could occur under a market model, because electricity is a vital component of both industry and private living. It is therefore important that we have guidance through the Electricity Commission. Again, I applaud the efforts of the Hon David Parker and his oversight—

Shane Ardern: What’s he going to do for the West Coasters who burn coal?

Hon DAMIEN O’CONNOR:—of changes that have further improved the regime to ensure that this economy can carry on, particularly in rural areas. Mr Ardern does not give a damn, because he thinks that the market will deliver to his rural constituents. No, no, we do require guidance, particularly in the area of electricity. In fact, one of the key proposals in Max Bradford’s wonderful restructuring was that beyond 2013 there would be no obligation to provide electricity to rural consumers. What a ridiculous proposal! The Government has stepped in and said that that obligation will continue, as it rightfully should, but Mr Ardern and his National colleagues, led by Max Bradford some time ago in restructuring the industry, thought that they could remove the obligation for lines companies to provide for rural consumers. This is the heart and soul of the New Zealand economy; these are the people out shearing the sheep, milking the cows, and living in rural houses. These people need electricity, but Max Bradford and the National Party said that it was not necessary to supply beyond 2013. Well, we have stepped in and said that that obligation will continue. We will also continue to step in where necessary, and when the Electricity Commission comes to us seeking further guidance, to ensure that we have a fully integrated, working, operative, and fair system of delivering electricity across this country so that we can get on and develop the economy in the way that it needs to be developed.

If we reverted to the policies that drove the electricity sector under National, we would have people ripped off left, right, and centre under the market model, we would have no obligation to supply—unless there was an opportunity—and we would see a rundown of electricity supply to the rural sector; there is no doubt about it. Mr Ardern knows that. He knows full well that his party’s restructuring of electricity was flawed. It failed, and without the passage of legislation such as this that we have in the House today, not only would we see social ruin in this country but we would have economic ruin, as well. I applaud the initiatives of my colleagues and Mr Parker in moving this legislation forward, and I look forward to Mr Ardern getting up and saying something in support of his rural constituents.

Does Mr Ardern agree with the Government when it says that there should be an ongoing obligation on lines companies to provide electricity beyond 2013, or does he say, as his party says, there should be no obligation? I look forward to him standing up and taking the opportunity that he has in the House now. He has the opportunity to stand up and say what he is doing for his rural constituents. We need to pass this legislation to protect vulnerable New Zealanders who rely on electricity for their lives, and we need to pass it to ensure there are incentives for energy efficiency for low users of electricity in regions such as the West Coast—where there are options other than electricity, but where they would otherwise, under the market model, be hammered by high lines charges and probably by high unit costs under a National Government as well, without any oversight or regulation.

It is really important that this legislation progresses. I am very happy to have taken the call and taken the opportunity to put a few points on the table, and to challenge the National members and ask whether, in 2013, they would remove the obligation to continue to supply rural constituents and rural electricity users. That is maybe one little question that National members could answer, because they cannot answer any of the big ones, particularly around the issue of electricity. Would those members sell off Meridian Energy? Would they sell off the State-owned energy generators in this country? I put it to the House that they would have to in order to pay for their extravagant tax cut promises, although we never know. That might change tomorrow, as happens with most National Party policy.

JEANETTE FITZSIMONS (Co-Leader—Green) : This Electricity (Disconnection and Low Fixed Charges) Amendment Bill is a very unambitious little bill that will not change the status quo very much. The Greens will vote for it because it does no harm and it may do a little good, but it will not take us very far towards the further unravelling of the Bradford mess that was created a decade ago now.

Nobody could disagree that vulnerable consumers with perhaps a poor command of English, with health problems, on low incomes, and with all the vulnerability that goes with that socioeconomic status ought to be protected from the terrible fate of the Muliaga family. I think that nobody would object to the fact that there will be guidelines that can be regulated and made mandatory if the industry does not play ball. I am quite sure that the industry learnt its lesson from the tragedy that occurred in Auckland and the publicity that surrounded it. I am quite sure that the industry will take a lot more care in future not to let that happen again, but, just in case, there is a power to regulate here, and we support it.

The other main thing the bill attempts to deal with is tweaking the low fixed charges. Low fixed charges came about initially as a compromise offered by a former Minister of Energy, the Hon Pete Hodgson, when I approached him to implement what used to be Labour’s policy on energy. It is still Green policy that there should be no fixed charges. Many other industries have high overhead costs, as well. They have fixed costs, and they cover those fixed costs in their per unit charge. If I drive on to the forecourt to buy petrol, I do not have to pay $20 to get on to the forecourt before I start filling up and then get the petrol at 50c a litre. The high fixed charges the petrol station has are covered by the per unit cost.

So it should be for electricity, because having any fixed charge is a very perverse incentive. It is a perverse incentive to save electricity, because electricity at the margin is cheaper, and one is locked into this fixed cost, regardless of how much one uses. It is a perverse incentive to invest in energy efficiency, as it mitigates particularly strongly against those on low incomes who use small amounts of power, and it makes electricity proportionately cheaper for the homes with spa pools, underfloor heating, three bathrooms, air conditioning going all summer, and five heated towel rails that are never turned off. It has always been Green Party policy that there should be no fixed charges, and it was, for many years, Labour Party policy that there should be no fixed charges, but that was dropped when Labour came into Government.

In 2000 or 2001 I debated this issue with Peter Hodgson, and he offered the compromise approach whereby every company should be required to offer an optional tariff, where the fixed charge was no more than 30c a day. That would make sense if people were low users and it would not make sense if they were high users. Well, it was a very compromised, ineffective solution, as it turned out. It was probably slightly better than nothing, but not a whole lot better.

The Minister is now tweaking it so that the level at which that low fixed charge becomes economic for people varies, depending on the climate zone they are in, and that is a sensible thing to do, too. But it does not go any way at all towards addressing the real problem of electricity pricing, which is that electricity pricing is trying to do two things at the same time. It is trying to make electricity affordable for those who can least afford it and who still have to keep warm, cook their food, and have light. It is a social necessity, and we should make sure that it is available to all citizens. At the same time, the pricing needs to send a signal that people will save money if they save electricity, that it is worth being efficient, that it is worth putting in more efficient technology, that it is worth investing in insulating houses, and that it is worth putting in solar heating and all the other things that can be done.

How do we do both those things at once? The first one requires low charges; the second one requires high charges. There is a solution to that problem. I have put it forward many times. I put it forward in my first reading speech on this bill. The solution was considered by the Commerce Committee and discounted, and I put it forward again now. It is that people should pay a low rate for the first part of their power bill and pay a higher rate for the last part of their power bill. In other words, the price at the margin needs to go up to give the signal that it is cost-effective to be energy efficient, and the price for the baseload needs to go down to make sure that a basic amount of electricity, to keep body and soul together and warm, is at an affordable price. It has been done in other countries. It is entirely doable. We give every household a basic block of power at a relatively low tariff, and then we have ascending steps of tariffs above that, with the top tariff being quite a bit higher than it is now.

The intent is for the overall system to be revenue neutral. We would not be asking the power companies to subsidise anything. We would simply be following the costs of supply in that our old hydro lakes, which everybody deserves a share of, are cheap to run, and everyone should have a share of those. The power that is really expensive is the last thermal station that was built, which is much more expensive to run. We should let the people who make that necessary pay those higher prices. It is a well-established formula, and it could be achieved. But, unfortunately, there was nobody on the Commerce Committee that considered this bill who understood progressive pricing. The Greens, with only six members in the House, do not have the right to a seat on the Commerce Committee, so we were not there to argue the case.

The select committee report states: “Some submitters said that they would prefer progressive pricing to low fixed charge tariffs. … However, we disagree with this view for the following reasons. First, designing a progressive pricing scheme is complex,”—well, I would ask whether anybody can point to anything in the electricity industry that is not complex these days—“and raises issues such as how to prevent retailers from raising other prices to recover the loss of revenue resulting from the restriction.” Well, that is exactly what retailers are meant to do. Retailers are meant to design a stepped tariff so that they recover the revenue from the top step to make up for the revenue they lose on the bottom step. That is the whole purpose of it, and it is meant to come out revenue neutral. It is a little bit like a progressive tax system, where people who earn only $15,000 a year pay a lower rate of tax than those who earn $150,000. So I do not think that the select committee’s first concern stands, at all.

The select committee report goes on to state: “Secondly, a progressive pricing scheme might encourage retailers to actively seek to shed small consumers to minimise loss.” That is a genuine concern, but I think that it can be managed through the regulatory system, and there is a prohibition now on just disconnecting people. The report goes on to state: “Thirdly, progressive pricing tends to distort marginal cost price signals, resulting in less efficient consumption and investment decisions.” I am sorry, but that is absolutely what it does not do. Progressive pricing gives us a high marginal price signal, which encourages people to invest in energy efficiency and renewables, and it thereby saves the cost of the next power station, which is always more expensive than all the preceding power stations. So it is really unfortunate that nobody on the Commerce Committee was prepared to take this up, and therefore the bill remains largely unchanged in this respect.

RON MARK (NZ First) : I stand to take a short call on behalf of my colleague Peter Brown, who is unable to take this call tonight. Energy is his portfolio. Having listened to the previous speaker, Jeanette Fitzsimons, the leader of the Green Party, I did a quick skim back through the membership of the Commerce Committee. I noted that not only were the Greens not there but also New Zealand First members were not there. Maybe some of these committees lack the extra peripheral vision that sometimes comes with having alternate parties represented more strongly and more forcefully on them. One of the sad realities of having a Parliament dominated by the two old-hack parties is that we tend to get the same two old-hack views. When alternate parties do not get a seat, we clearly do not get alternate views.

John Hayes: “Mr Xenophobia”.

RON MARK: We have people like John Hayes, the outgoing member for Wairarapa, sitting there and championing Max Bradford’s reforms, which were going to be the solution to all of our electricity problems. Clearly they are not. I guess it is a source of embarrassment to National members every time I say “Max Bradford”, and Wayne Mapp has just shuddered visibly in front of me in the House. I can understand why he would do so.

I cannot help but notice a couple of things. Mr Hayes should not chuck such unparliamentary terms as “xenophobia” across the House, and he should not accuse a member of being xenophobic. Mr Hayes entered into a rather horrible deal with a lady of Asian descent, and a figure of about $980,000 was involved. I heard on the grapevine that after some considerable pressure he has paid most of that money back to her.

The ASSISTANT SPEAKER (H V Ross Robertson): Narrow.

RON MARK: I know that I need to narrow the debate, but xenophobia has nothing to do with the electricity legislation before us, and if Mr Hayes is able to make such interjections he does deserve a bit of a slap-down on that note. If he would just look after the Asian investors whom some people have accused him of ripping off, we would not be in these embarrassing situations.

I want to say, at this point in time, because it seems the entire House is in agreement, that New Zealand First will support this Electricity (Disconnection and Low Fixed Charges) Amendment Bill. Sometimes when we are passing reforms through this House, such as those of the previous National Government, under the guidance of Max Bradford—who gave us the wonderful electricity reforms that were marketed as giving higher competition into the market, giving our farming community a better choice, and giving businesses a better choice, and through those choices there would be cheaper prices—we get so fooled by the smoke that Cabinet Ministers put up that we fail to see the reality until it smacks us in the face. Sadly, the incident that arose that brought this legislation to the House smacked us all in the face.

Some of those people who today sit on the Opposition front bench—including the three seats occupied by Nick Smith, Lockwood Smith, and Maurice Williamson, and they were all sitting there this afternoon—were front-bench Cabinet members in that Government. And this is supposedly the refreshed look of the incoming Government! There ain’t nothing refreshing about those faces. They are tired and old. We would have more confidence if we saw some of the younger, more enlightened members who are sitting on the Opposition backbenches, like Shane Ardern and Nathan Guy, coming to the front bench. If they came to the front benches, we might be able to have some confidence going forward that we would have a better looking Government-in-waiting.

I was trying to say that all of us, as members of Parliament, spend our time trying to help low-income families, particularly those on fixed incomes such as the elderly, to make ends meet. All of us from the Canterbury area and, I assume, from down in the lower regions of the South Island where it is colder—some of those marginal areas that have been discussed this evening—end up dealing with people who are too afraid to turn on their heaters in their homes because of the cost of the bills. I know, from the experience of knocking on doors at 11 o’clock in the morning, in Christchurch in the winter, that I have very often found elderly people sitting wrapped up in quilts because they have been too afraid to put on their electric heaters. This is complicated by the fact that Christchurch then ripped all the fireplaces out of the State homes and the council homes, in pursuit of a clean-air policy.

My only message to some parties in this House is that when they pursue particular philosophies, like market-driven forces and the idea that the “market will deliver”, and they repeat that mantra, or when they pursue policies on the environment and advocate that at all costs we must clean up the air, we need to spread our vision a little bit and think about the consequences. The consequence of taking all the fireplaces out of the homes of the elderly and the low-income families in Christchurch was that many froze to death. They could not afford to turn on the electric fires in their homes, and they were too terrified of the consequences of doing that in peak winter consumptive periods. Unfortunately, the tragedy that occurred in Auckland, and the death in respect of that case, brought that message home loud and clear, but it is a message that came home far too late.

I think New Zealand First’s only plea to people, particularly to the members of the two major parties, because they tend to dominate what happens in this House, is to apply a little peripheral vision, a little less of the ideology, a little less of the mantra, and a little bit more practicality. The members of those parties should go down to the farm and talk to some of the cockies who have been living through these conditions and trying to manage businesses in the most extreme climates and in the most demanding of times. They should take a dose of reality. They should go into the low-income suburbs such as Aranui in Christchurch, and in west Auckland and South Auckland, and look at the real impacts. When those members start preaching the mantra that the market will deliver, they should please remember that the market’s prime motive, and the prime motive for the electricity industry—an area where we cannot afford to lose our conscience—when given that free rein, is to make a profit. That is all.

It is good to see this legislation here, because it does return some conscience to the operation of the electricity industry. This legislation returns a little reality, and it brings a wider view to all of us in this place that we have a wider responsibility to taxpayers, to the consumers of electricity, and to the citizens of this nation than simply to return a profit and a bottom line to our ledgers.

Dr PITA SHARPLES (Co-Leader—Māori Party) : Tēnā koe, Mr Assistant Speaker. Many people in the history of our great nation are remembered for their exploits—Hone Heke for chopping down the flagpole, Sir Apirana Ngata for the work he did as a parliamentarian, Sir James Hēnare for leading the Maori Battalion and for his work as a statesman, Buck Shelford for his leadership in rugby, and so on. Unfortunate though it may seem, the name Folole Muliaga will now forever be associated with this Electricity (Disconnection and Low Fixed Charges) Amendment Bill. This is a bill that reminds us of the helplessness and the tragedy of daily life for far too many New Zealanders. The tragedy is not the fact that we have low-income families in our midst. There will always be those who struggle. The tragedy is how deaf we have become to the plight of an ever-increasing sector of our community, and the helplessness that poor people feel about a society that treats them like a boil on the butt rather than as people in need.

We know of the Electricity Commission’s guidelines on arrangements to assist low-income domestic consumers, the recognition of the special needs of those with health or disability issues, and the fact that the commission wanted the power companies to deal with low-income consumers. But we also know that the existence of such guidelines is recognition of the growing gap between the haves and have-nots in our society. We know that New Zealanders are being crippled by the massive hike in housing prices. We know that 250,000 households get Work and Income’s accommodation supplement for low-income earners and beneficiaries. We know that some 230,000 kids miss out on support from the Working for Families package, simply because their parents are on a benefit. We know that far too many New Zealanders are being forced to buy cheap, nasty food because their money is being gobbled up by rents and other things. We recall with great sadness, even though the guidelines existed, that there was nothing in place to deal with the heartless response of the call centre that flat-out refused even to discuss any other payment arrangements for the Muliaga family.

We welcome this bill if it helps to improve the training of the call centre staff, if it helps people threatened with disconnection, and if it helps poor people understand their rights, how to talk to power companies about what different charges mean, how often bills come along, what the penalties are if people are late in paying, how people handle any disputes, and how people find out whether there will be any power shutdowns. The challenge, of course, is how to communicate all this to the consumers. Will a pamphlet or a note on a website do? How do power companies tell who is at risk? What happens when a household is close to being cut off? How do power companies teach vulnerable consumers about their rights? How are other agencies involved, such as iwi, health and social service groups, Work and Income, and budgeting services?

I ask these questions because something else we in the Māori Party know is that putting information on websites, putting out more pamphlets, and telling people they are welcome to discuss various aspects of their power bill does not work, for the simple reason that poor people do not ask rational questions about power supply and default procedures. They do not know how to ask. They are too shy of looking dumb, so they look at the ground, they smile, they mumble a “yes” when asked whether they understand, they shuffle their feet, they nod while being talked to, but most of them just want those helping them to go away, because they feel uneasy standing on their porches next to rotting rubbish bags or smelling the stink of clothes in the wash house.

We know that disconnection affects a family in heaps of ways, such as no TV, no kai, not being able to flush the toilet, no hot water to wash with, no light for homework, and the heater cannot be turned on. People start blaming one another, families start bickering and fighting, and kids sneak off to their mates’ places because they hate being in the dark. We also know that disconnection leads to dangerous situations like fires in unsafe places from candles being close to beds, and people trying to hot-wire their houses in the dark.

Sure, none of us wants to see people get their power cut off, but in a time of rising food prices, rising petrol prices, unreachable house prices, and rising electricity prices disconnections are a fact of life that we have to deal with. Electricity price rises and disconnections affect not only poor people. The Federation of Family Budgeting Services has issued a warning that while in 2002 the average debt owed by clients was $2,500, today that debt is a staggering $6,000. The federation has also warned that more and more middle-income people are struggling with mortgages, rent, and making ends meet.

What happened to the Muliaga family last July was a tragedy. What happened to the rest of society was a brutal wake-up call. Hopefully, this bill will lead to better things. It would be nice to think that power companies have learnt something, and we hope the new measures proposed in this bill will help consumers understand how to better manage their power costs. But I worry that our response will look great on paper but still go right over the heads of the people it is intended to serve. Having good information is meaningless if those who need it never see it. We urge Parliament and the electricity industry to put more energy into working with people who know their communities, and engaging with them to ensure that the people of those communities genuinely understand the issues and how they affect them and their families.

Hon LUAMANUVAO WINNIE LABAN (Minister of Pacific Island Affairs) : Kia ora, talofa lava, and warm Pacific greetings. I rise to support this second reading of the Electricity (Disconnection and Low Fixed Charges) Amendment Bill. I rise with sadness, as I remember Folole Muliaga and the tragedy of her death, which should never have happened. We hope that something like that never happens again. The tragic circumstances surrounding Mrs Muliaga’s death shocked our nation. I personally will never forget the sorrow of visiting her husband, her children, her extended family, and her community knowing that her death was so unnecessary. The way the Muliaga family dealt with losing their mother, wife, auntie, daughter, sister, and friend provided all New Zealanders with a glimpse of how the generosity of spirit and the humanity of the Pacific people can deal with a horrific event, leading to reconciliation and healing.

Electricity is an essential service. Following the Muliaga tragedy, the Electricity Commission began working with electricity retailers, Government departments, and our community organisations to develop guidelines understood by all dealing with disconnections. These strengthened guidelines require a sense of social responsibility from electricity retailers in protecting some of our most vulnerable whether it is for reasons of age, health, disability, financial difficulty, or, if I may add, culture and language. The guidelines make it clear that electricity providers must advise consumers having difficulty paying their bills of the avenues of assistance or help available to them from Government agencies and community service providers. Electricity retailers must take steps to identify vulnerable consumers and consult with the Ministry of Social Development before disconnecting. They must also identify and ensure that those reliant on electricity for medical equipment to maintain life are protected.

The purpose of this bill is to enable regulation should compliance with the guidelines be unsatisfactory. This bill amends the Electricity Act 1992 to strengthen the regulation-making powers in relation to the disconnection of electricity and the low fixed-charge tariff options for domestic consumers. I strongly support the bill’s amendments to improve the ability to regulate regarding disconnection. This provides electricity retailers with terms and conditions for billing and payment options, overdue accounts and disconnection processes, the supply of services, and a process for identifying consumers who would be at risk if their electricity was disconnected.

The bill also amends the low fixed-charge tariff options for domestic consumers. Low fixed-charge regulations were introduced in 2004 to assist low-use electricity consumers and encourage greater energy efficiency. Currently, over half of the households in the north of Auckland are on the low fixed-charge tariff, as opposed to only 9 percent of households in and south of Christchurch. The amendment to increase the eligibility threshold from 8,000 kilowatts to 9,000 kilowatts for the low fixed-charge tariff will allow more households in Christchurch and the deep south, excluding Westland, to take advantage of the rate for low electricity as the higher threshold of 9,000 kilowatts is closer to the average consumption of those living in that beautiful but colder part of the country.

As already stated, electricity retailers have been given the opportunity to follow the guidelines for electricity disconnections and this bill will allow for the guidelines to be implemented if they are not adhered to voluntarily. When announcing that the Electricity Commission was preparing guidelines, Prime Minister Helen Clark said it was very important that electricity retailers had a clear idea of the Government’s and the public’s expectations. At a community forum in south Auckland a few weeks ago, I was encouraged to hear from a budget adviser based in Māngere who used to have large numbers of people coming into his office because their power had been disconnected. He was pleased to report to the forum that this no longer happens. It should not have taken the death of Folole Muliaga for these changes to be implemented. However, I am happy and pleased that the electricity retailers have taken notice following this tragic event and have taken the opportunity to follow the voluntary guidelines. I am also advised that companies have made overdue bills, credit letters, and automated phone calls clearer. Written information has also been provided in a number of languages, including Samoan, Tongan, Māori, and Japanese. I am confident that the industry will continue to follow the guidelines and act in a socially responsible manner, with this bill providing the regulating power, if necessary.

In my maiden speech I said I would pursue a permanent interest in advocating and promoting the interests of women, Pacific people, Māori, the elderly, ethnic minorities, and all New Zealanders who are struggling to live a life of dignity. At the time of Mrs Muliaga’s death I assured the Pacific community that our Government was taking this issue very, very seriously. I am pleased to be part of a Government that is bringing this bill to the House, protecting our disadvantaged consumers, and ensuring the safety and well-being of all of our families in New Zealand. The Commerce Committee has cross-party support for this bill and I strongly commend it to the House. Thank you.

ALLAN PEACHEY (National—Tamaki) : I rise on behalf of the National Party to support the second reading of the Electricity (Disconnection and Low Fixed Charges) Amendment Bill. I compliment the Minister who spoke before me, Luamanuvao Winnie Laban, on the sensitivity of her remarks. I know that none of us who serve electorates in this country and who have a concern for the people we represent would like this to have happened to any of those people. I pay my respects to the Minister. However, I want to reflect for a moment on the comments on this bill from the New Zealand First member Ron Mark. His speech brought to the realisation of this House just how irrelevant that pathetic little rump of a party and its seriously diminished members have become. This is a highly serious matter. The only consolation I take from that is that the electorate itself will have figured that out.

You know, when we look at this bill we see another attempt by the Government to regulate. That is what we have come to expect from that crowd over there. One has to come back—[Interruption] Let us listen to the Labour members. The rest of us have meetings in caucus rooms; they meet in the commissariat room. That sort of thinking leads the Government to believe that if it regulates, regulates, and regulates, then it can control the lives of all New Zealanders. We must not lose sight of something the Prime Minister herself said. The Prime Minister—now in the dying, gasping days of her administration—made the point that Mercury Energy was in breach of the social responsibilities written into the existing law under which State-owned enterprises operate. The Prime Minister made that point. So we need to ask why we are rushing into enacting legislation. What is the rush? This legislation is rushed.

I acknowledge the efforts of the National Party members of the Commerce Committee who considered this bill for their common sense and for the tidying-up that has occurred as a result of their work. This country is fortunate that in this House there is an Opposition that does its job properly, scrutinises proposed Government legislation with rigour, and makes sure that we bring back to this House the very best legislation that can come out of a select committee.

Sue Moroney: And then they normally vote against it.

ALLAN PEACHEY: Oh, well! We can hear the Government members over there; they are on their way out.

I have to express some reservations about the bill. Is it really absolutely necessary to once again regulate, particularly in light of what the Prime Minister, who is now in her dying days as leader of the Government, shared about Mercury Energy? But we have this legislation before us, and we have to deal with it. The National Party is seeking to contribute positively and helpfully to the debate, unlike the New Zealand First member who spoke earlier.

I do not think there is a New Zealander—I certainly do not know of a New Zealander—who would not want to protect people who require electricity for something like critical medical care. There would not be a person in New Zealand, I suspect, who would not want that to be done. There would not be a person in New Zealand who was not upset and concerned about what happened. But members should just remember that Governments can regulate as much as they like, but at the end of the day, when all the chickens are in, it is the conduct of individual people and the decisions they make that will determine outcomes. You see, one of the reasons why this country is losing its direction relates to the silly interjections that come from the Government side of the House. Government members do not understand that by regulation, making more rules, meeting in their commissariat room, and deciding what is best for the rest of us, they fail to figure it out. But we know—this House knows—that very shortly those members will be gone.

DAVE HEREORA (Labour) : Kia ora, Mr Assistant Speaker. I take this opportunity to stand in support of the Electricity (Disconnection and Low Fixed Charges) Amendment Bill. I will start with a couple of comments particularly to the previous speaker, Allan Peachey, around his question of whether it is necessary to regulate. I honestly think that in the absence of, in this case, the electricity retailers observing a sense of social responsibility it is our responsibility to give serious consideration to regulation. My colleague Luamanuvao Winnie Laban spoke previously of the loss of the Muliaga family. None of us wanted to witness or experience that situation. But at the end of the day, we needed to ask ourselves the question of who was responsible—who would take that responsibility. Is it the responsibility of the electricity retailers? Or is it indeed our responsibility, in our role as members of Parliament, to ensure that we have some protections in place, particularly for those families that are in need? So I think the answer to my friend’s question is “Yes, it is necessary to regulate, particularly for that reason.”

I have also learnt when working in the community of Māngere, which now has Su’a William Sio, of the difficulties surrounding some of the families in that community over this issue. I can assure them that we will continue to monitor and offer assistance wherever we can. But there is another scam—well, I do not know whether it is a scam but there is another situation—occurring within the industry. I refer to the meter-powered boxes in some of these houses. It is a “pay as you use” card top-up system. I do not know whether members have heard of it. People roll up to the garages or retailers that have these boxes and top up their cards. It can be guaranteed that on benefit night there are queues of people trying to top up their cards. It is that group of people, the beneficiaries, who are using these cards.

I understand that the system has changed to being a top-up on the telephone. That is nice and easy. That is all very well; people do not have to queue up. But if they top up on the telephone then they have to pay an extra $5 levy, on top of what they are applying for, for their power. People can go on to the Internet, which costs nothing, but how many within that group of people have a computer? So there are ongoing issues within that industry that we need to be mindful of, to ensure that we are at least giving the right consideration in the right places.

I do think that this bill strengthens the regulation-making powers in the Act, and, as I said earlier, it responds to recent concerns about the disconnection practices of electricity retailers. It also ensures that we as the Government have the opportunity to regulate the content of the disconnection guidelines that have recently been developed. We heard from the Minister earlier that the voluntary aspect within the industry is working and working well, but there is a need for the Government to be associated with ensuring that we regulate the content of those guidelines if necessary. The bill also raises the threshold of lower fixed charges under the Act, from 8,000 kilowatts per year to 9,000 kilowatts per year for domestic consumers, particularly in Christchurch and south of that city.

I want to reflect on two parts of the bill. The first is the low fixed charges, where we are targeting around the regulations for the low fixed-charge tariff options for domestic consumers. The low fixed-charge regulations that were introduced had the purpose of assisting low-use domestic consumers and encouraging energy efficiency. Prior to their introduction, low-use consumers in many areas faced unreasonably high fixed daily charges for their limited or low electricity usage. The introduction of the regulations provided these low-use consumers with a tariff option that was more equitable for low-energy usage and more compatible with the Government’s energy efficiency objectives. At present, these regulations require networks and retailers to make available a low fixed-charge tariff option to all domestic consumers that they service who have consumption at their primary dwelling of less than 8,000 kilowatts per annum. The same 8,000 kilowatt threshold is used across the entire country, despite the reality that in colder parts of the South Island average power use is higher in large part, because of the climate—it is colder—and there is little gas in that area.

The second change in the bill that I want to refer to is the extension to the Minister’s powers to grant exemptions from the application of the regulations to electricity distributors and retailers. We must have that opportunity to ensure that there is some monitoring and therefore disciplines applicable to those regulations. In particular, in some small isolated networks the cost of servicing consumers can be far higher than is normal for grid-connected networks, particularly in circumstances where the compliance requirements and business costs of administering the low fixed-charge tariff can be excessive.

So those are the two aspects of the bill that I wanted to raise, but in particular I wanted to reiterate the moral argument surrounding the purpose of this bill, particularly in relation to the question raised by the previous speaker. Yes, I do think it is absolutely necessary, particularly with regard to an industry that had lost its way in terms of the problem at hand. So bearing in mind that the changes in the bill will require electricity retailers to observe a sense of social responsibility in respect of those in financial difficulty, I commend the bill to the House.

  • Bill read a second time.