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Greens' Electricity Initiatives Bear Fruit

The environment and small consumers have benefitted from Green Party input into electricity industry reforms.

Months of negotiation between the Government and the Greens have led to several improvements to the reforms announced today.

"Perhaps the biggest gain has been new and transparent public accountability for the industry through a public watchdog," party co-leader Jeanette Fitzsimons said today.

"There's little pressure at present for the industry to make electricity in an environmentally-friendly way or to admit, even, how power is produced. We're concerned about over-use of fossil fuels which adds to climate change pollution, while more sustainable dams are suspected to be under-used, with water spilt deliberately to use more gas, and generating capacity wasted."

The outcomes expected for the electricity industry will now be specified in a policy statement and industry performance will be audited each year by independent officers of Parliament - the Parliamentary Commissioner for the Environment and the Auditor General.

The Greens have also kept Labour to its pre-election promise that fixed charges ought not be more than 10 percent of the average consumer's bill.

"The Caygill Enquiry recommended an increase of 25 percent," Ms Fitzsimons said. "Some officials wanted no limit at all. We have bargained the Government down to 10 percent, a compromise we will accept to get the other benefits of the legislation, although we will again put the case for zero in the select committee.

"Fixed price hikes this year by electricity supplier TransAlta boosted power bills for those who can least afford it - the poor and the thrifty. The new prices also offered the wrong incentives - to use more electricity not less."

Another important Green initiative was to allow lines businesses to invest in non-traditional rewewable energy sources such as wind and solar. This has been prohibited under National Party legislation.

(Background from Jeanette Fitzsimons on Green achievements and failures in electricity reform negotiations follows).

The Greens had three main objectives in these negotiations with the Govt:

1. To protect small consumers from poor service and high fixed charges.

The Caygill report advocated a limit of 25% of the average consumer's bill; this would have put fixed charges UP in most parts of the country. We wanted zero, with all the costs levied per unit consumed, but have had to settle for an optional tariff of 10% which should be a decrease for everyone. We would like to see this expressed in cents per day, eg 30 cents per day, and will argue for this at the select committee.

We strongly support the package of consumer service contracts, a complaints Ombudsman, the use of the Consumer Guarantees Act, an obligation to supply, and rules for customer switching and company bankruptcy.

2. Security of supply.

The competitive market and the breakup of the integrated generation system has left no-one responsible for ensuring the lights stay on. If the market players can make money out of letting the system crash, they are free to do so.

As a result of the Greens negotiation, security of supply will now be in the Government policy statement and the Industry Board is responsible for making the rules in a way that protects security of supply. The Auditors will monitor whether rules have been devised to achieve this and will report to Parliament.

3. Sustainability

The Greens wanted to be sure that water was not being spilt from the hydro dams and gas burned because of market gaming. This has happened in the past, but the information is not reported at present to determine whether it still happens.

We wanted to be sure gas is used in the most efficient way possible to minimise greenhouse gases. We wanted energy savings to be able to compete with energy production in the market, which at present they can't. We wanted new renewable forms of energy - wind, solar and wood - to be treated fairly and not discriminated against when they try to sell into the market. The existing players must not be able to combine to lock out innovations. This is partly a question of how Transpower prices its lines.

In other words we want to move towards a system where electricity is produced efficiently, consumed efficiently, and new renewables gradually replace fossil fuels in power stations.

The Government Policy Statement has been rewritten to specify that the Board should write its rules to achieve all these outcomes. In addition we have given new renewables a hand by allowing them to be built by lines companies. When former energy minister Max Bradford separated the lines and energy companies a number of plans for new wind plants were abandoned because the lines companies were no longer allowed to own them.

We were concerned at the Government proposal for industry self-regulation by a board appointed by the industry itself, and we still are. We do not believe the "independent" members will be truly independent - for example they can't be directors or employees of industry players, but they can be lawyers or consultants acting for them. That is why we said the system needs a watchdog. The Government wouldn't agree to a regulator like every other country with a competitive electricity market has, but has agreed to our proposal for a watchdog to monitor, audit and report to Parliament. The Auditor General and the Parliamentary Commissioner for the Environment will have full access to industry information and will work together to check whether the rules the Board sets for the industry are meeting the requirements of the Government Policy Statement. If they are not, they will have to do better, or the Government will regulate.

This is not the system we would have proposed, but we have worked within the system the Government wanted and believe we have put enough safeguards in place to meet our three objectives.

Ends.


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