Media Statement

4 February 2000

Electricity Inquiry: budget

The Minister of Energy, Pete Hodgson, released today further details of the budget for the Ministerial Inquiry into the Electricity Industry.

Mr Hodgson announced yesterday that the total budget for the Inquiry was $850,000 (excluding GST). Of that $250,000 is to come from the existing Energy budget and $600,000 is new funding allocated by the Government.

In response to media requests Mr Hodgson said today he was happy to release a more precise breakdown of the Inquiry budget.

"I am grateful to the members of the panel who have agreed to lower their normal private sector rates in response to the Government's desire for modesty in these matters."

The Chairman of the Inquiry, Mr David Caygill, will receive a daily payment of $1500. Panel members Dr Susan Wakefield and Mr Stephen Kelly will each receive $1000 a day.

Mr Hodgson said Mr Caygill's payment was substantially below his standard charge-out rate as a partner in the law firm of Buddle Findlay. Mr Caygill had also offered to cover his own travel expenses between his Christchurch home and Wellington. Because of Mr Caygill's role in the Inquiry, Buddle Findlay faces a significant loss of potential income as it is unable, for conflict of interest reasons, to act for parties making submissions.

Mr Hodgson said Dr Wakefield's payment was significantly below what a person of her expertise and stature would normally charge. Mr Kelly's payment was equivalent to key components of his normal remuneration.

The budget for consultants to the Inquiry was $360,000, Mr Hodgson said. This would include the fees for Professor Stephen Littlechild, one of the world's foremost authorities on electricity pricing. It would also cover the services of a contracted full-time member of the Inquiry secretariat, and other specialists contracted as the Inquiry saw fit.

Mr Hodgson said Professor Littlechild's remuneration would be finalised by the Inquiry, although he had indicated a willingness to accept considerably less than his normal fee.

The travel budget for the inquiry is $82,000, covering airfares and accommodation costs for the three Inquiry members and one member of the secretariat. It also provides for Professor Littlechild to travel with the Inquiry members for part of the trip.

"The Government regrets having the expense of this inquiry forced upon it by the necessity of clearing up the confusion created in the electricity sector by the previous administration," Mr Hodgson said. "However it is worth noting that New Zealanders spend a million dollars on electricity every three and a half hours. If this Inquiry can advise the Government on how best to ensure value for customers then it will be money well spent."

ENDS

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