The Energy Minister says he's focused on making sure Kiwis pay reasonable prices for power.
The Government's released its Policy Statement on electricity - outlining the role of the Government and the Electricity Authority.
Simeon Brown says their role is ensuring correct market settings - and enabling private investment.
He says the Authority's job is driving a more competitive sector that avoids excessive prices.
Brown told Francesca Rudkin they don't want the Authority concerning themselves with things they don't need to.
“The Electricity Authority needs to ensure that they are focused on competition, affordability and security of supply, and that they’re not focused on what type of fuel is actually being used.”
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Episode Transcript
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Speaker 1 (00:00):
Good to have you with is a seven past five right.
The government has told the Electricity Authority to get more
competitive as it tries to curb soaring electricity prices. We
all know as of late energy costs have been rising,
with multiple large manufacturers saying prices have forced them to
close down. Energy Minister Simon Brown outlined expectations and a
(00:21):
government policy statement which the authority must now adhere to
as it works to fix the market. And as Simeon
joins me now, good evening, thank you for your time.
Speaker 2 (00:32):
Good evening, Simeon, are you confident.
Speaker 1 (00:34):
These expectations will ultimately bring prices down?
Speaker 2 (00:39):
Well. What we're making very clear is that the government's
top priority is to ensure that New Zealand kiwis even
businesses and households have accessed internationally competitive ultracy prices. That
the Aultriscty Authority needs to ensure that they are focused
on competition, affordability and security of supply and that they're
(01:00):
not focused on what type of fuel is actually being used.
We've been very clear as a governments that actually we
want to keep the lights on, and that means they
need to make sure the market is operating in a
competitive way to deliver that affordable energy to New Zealanders.
Speaker 1 (01:14):
So those expectations are the competitive, good, supply and affordability.
Speaker 2 (01:18):
Right, that's correct. That's the key focus the government's focused on.
Under the last government they were pursuing significant interventions into
the ultriacy market, such as the Lake Conslow scheme they
were making. They were at a policy of one hundred
percent renewable energy by twenty thirty, which would have caught
(01:40):
the country billions of dollars to try and achieve. We've
been very clear with full agnostic. We know that there
is going to be more renewable generation becoming online. However,
the Ultricty Authority's role is to focus on competition, security
of supply and reliability for consumers rather than what type
of fuel is being consumed.
Speaker 1 (02:01):
Yes, of course, reliability apologies. How does the electricity authority
therefore enforce these expectations that you've put on them?
Speaker 2 (02:10):
So the government sets the policy direction and that is
what we've done today. The Ultrucy Authority is required to
have regard to that as they make decisions in regards
to the code. They play a really important role in
terms of regulating the market. There's a lot that they
they have that they need to do in terms of
responding to this, we want to see more distributed forms
(02:32):
of energy able to participate in the market. We want
to see more competition in the wholesale market. They'll have
that they have the role of regulating participants to do that.
But also it's about setting a clear expectation to wholesale
participants that they need to manage their risks more appropriately.
What we saw this year with the wholesale wholesale price
being eight hundred dollars a mega what now for many
(02:56):
for a number of weeks through August was unacceptable to
make sure the fuel is in the right place to
manage those dry year risks rather than that risk being
externalized out onto KEII households and businesses. That's unacceptable and
our message is very clear to the optus, the authority,
and to wholesale participants that that risk needs to be
better managed to ensure that key households and businesses aren't
(03:19):
facing the brunt of those high prices.
Speaker 1 (03:22):
So as a household, when can I expect to see
the impact of this GPS.
Speaker 2 (03:28):
Well, ultimately, this is about setting our expectations clear. The
regulator now has to put a work program together around
how they intend to give effect to it. They will
have regard to it, they will be there's a number
of changes that they need to continue to evolve as
there's different forms of becoming online. Ultimately, this is about
(03:49):
our expectations so that the market is operating more competitively
to deliver that those prices to consumers. In terms of
the impactful consumers, we're obviously very clear that the Electric
Authority has to be very focused on next winter. Next
winter is looking like a very tight winter again like
this winter, So acting now in terms of making sure
(04:13):
that wholesale participants are managing those risks rather than those
risks being are coming to fruition in the middle of winter.
They need to be managed before Christmas in terms of
making sure the fuel is there in the right places,
rather than us entering next winter with those risks in place.
Speaker 1 (04:30):
So then you would expect next winter the market has
reacted and we can all enjoy more competitive affordable power prices.
Speaker 2 (04:37):
Well, Ultimately, you know, the outlook for next winter is
concerning in terms of there is significant risks in place
in terms of you know, what we saw this year
around low hydro inflows low wind Some of the forecasts
are concerning again for next winter. But what our message
is to the ultricy Authority and to the market participate
(05:00):
is that those risks need to be managed ahead of
entering winter rather than being managed during winter. And I'll
give you an example around You know, we had a
twenty percent reduction in gas supply this this year, and
that's a number of reasons behind that, including the last
government's ban on oil and gas exploration, but the key
(05:21):
issue was that that gas wasn't you know, methdex is
the largest user of gas. That gas has been used
to make methanol rather than put into the eltricity market,
and that deal wasn't done until the middle of August
to actually ensure that was being made available to produce electricity.
Those type of arrangements in making sure the fuels in
the right place, those conversations and those arrangements need to
(05:45):
be need to be sorted ahead of time. Risks need
to be managed. Securio supply to be managed in the
long term, not just the short term, so that consumers
and businesses aren't put in those risky positions as we
saw this year.
Speaker 1 (05:58):
Minister, if you wouldn't mind. Would you mind taking it
energy hat off and just putting your local government hat
on just for a quick moment. What did you think
about Wellington City Council's decision on the airport shares yesterday?
Do you think the Government will end up.
Speaker 2 (06:09):
INTERVENI well, look, I think it's concerning. Ultimately, it's a
significant decision to make a significant it's a significant change,
will propose change to their long term plan. My concerns
for Wellington ratepayers and the potential impact this may have
on their rates bills. They've already received one of the
highest rates bills in the country and so look, the
(06:30):
Government's keeping an eye on what's happening here. Councils are
able to amend their long term plans. But what I
would say is this is concerning. It is a significant change.
I'm concerned about what the impact it will have on
Wellington ratepayers who are wanting to have a council which
is focused on making long term decisions and actually sticking
to them rather than constantly changing their minds.
Speaker 1 (06:53):
Energy Minister Simon Brown, thank you very much for your time.
I appreciate it.
Speaker 2 (06:57):
For more from Heather Duplissy Allen Drive and live to
news talks. It'd be from four pm weekdays, or follow
the podcast on iHeartRadio.
Good to have you with is a seven past five right.
The government has told the Electricity Authority to get more
competitive as it tries to curb soaring electricity prices. We
all know as of late energy costs have been rising,
with multiple large manufacturers saying prices have forced them to
close down. Energy Minister Simon Brown outlined expectations and a
(00:21):
government policy statement which the authority must now adhere to
as it works to fix the market. And as Simeon
joins me now, good evening, thank you for your time.
Speaker 2 (00:32):
Good evening, Simeon, are you confident.
Speaker 1 (00:34):
These expectations will ultimately bring prices down?
Speaker 2 (00:39):
Well. What we're making very clear is that the government's
top priority is to ensure that New Zealand kiwis even
businesses and households have accessed internationally competitive ultracy prices. That
the Aultriscty Authority needs to ensure that they are focused
on competition, affordability and security of supply and that they're
(01:00):
not focused on what type of fuel is actually being used.
We've been very clear as a governments that actually we
want to keep the lights on, and that means they
need to make sure the market is operating in a
competitive way to deliver that affordable energy to New Zealanders.
Speaker 1 (01:14):
So those expectations are the competitive, good, supply and affordability.
Speaker 2 (01:18):
Right, that's correct. That's the key focus the government's focused on.
Under the last government they were pursuing significant interventions into
the ultriacy market, such as the Lake Conslow scheme they
were making. They were at a policy of one hundred
percent renewable energy by twenty thirty, which would have caught
(01:40):
the country billions of dollars to try and achieve. We've
been very clear with full agnostic. We know that there
is going to be more renewable generation becoming online. However,
the Ultricty Authority's role is to focus on competition, security
of supply and reliability for consumers rather than what type
of fuel is being consumed.
Speaker 1 (02:01):
Yes, of course, reliability apologies. How does the electricity authority
therefore enforce these expectations that you've put on them?
Speaker 2 (02:10):
So the government sets the policy direction and that is
what we've done today. The Ultrucy Authority is required to
have regard to that as they make decisions in regards
to the code. They play a really important role in
terms of regulating the market. There's a lot that they
they have that they need to do in terms of
responding to this, we want to see more distributed forms
(02:32):
of energy able to participate in the market. We want
to see more competition in the wholesale market. They'll have
that they have the role of regulating participants to do that.
But also it's about setting a clear expectation to wholesale
participants that they need to manage their risks more appropriately.
What we saw this year with the wholesale wholesale price
being eight hundred dollars a mega what now for many
(02:56):
for a number of weeks through August was unacceptable to
make sure the fuel is in the right place to
manage those dry year risks rather than that risk being
externalized out onto KEII households and businesses. That's unacceptable and
our message is very clear to the optus, the authority,
and to wholesale participants that that risk needs to be
better managed to ensure that key households and businesses aren't
(03:19):
facing the brunt of those high prices.
Speaker 1 (03:22):
So as a household, when can I expect to see
the impact of this GPS.
Speaker 2 (03:28):
Well, ultimately, this is about setting our expectations clear. The
regulator now has to put a work program together around
how they intend to give effect to it. They will
have regard to it, they will be there's a number
of changes that they need to continue to evolve as
there's different forms of becoming online. Ultimately, this is about
(03:49):
our expectations so that the market is operating more competitively
to deliver that those prices to consumers. In terms of
the impactful consumers, we're obviously very clear that the Electric
Authority has to be very focused on next winter. Next
winter is looking like a very tight winter again like
this winter, So acting now in terms of making sure
(04:13):
that wholesale participants are managing those risks rather than those
risks being are coming to fruition in the middle of winter.
They need to be managed before Christmas in terms of
making sure the fuel is there in the right places,
rather than us entering next winter with those risks in place.
Speaker 1 (04:30):
So then you would expect next winter the market has
reacted and we can all enjoy more competitive affordable power prices.
Speaker 2 (04:37):
Well, Ultimately, you know, the outlook for next winter is
concerning in terms of there is significant risks in place
in terms of you know, what we saw this year
around low hydro inflows low wind Some of the forecasts
are concerning again for next winter. But what our message
is to the ultricy Authority and to the market participate
(05:00):
is that those risks need to be managed ahead of
entering winter rather than being managed during winter. And I'll
give you an example around You know, we had a
twenty percent reduction in gas supply this this year, and
that's a number of reasons behind that, including the last
government's ban on oil and gas exploration, but the key
(05:21):
issue was that that gas wasn't you know, methdex is
the largest user of gas. That gas has been used
to make methanol rather than put into the eltricity market,
and that deal wasn't done until the middle of August
to actually ensure that was being made available to produce electricity.
Those type of arrangements in making sure the fuels in
the right place, those conversations and those arrangements need to
(05:45):
be need to be sorted ahead of time. Risks need
to be managed. Securio supply to be managed in the
long term, not just the short term, so that consumers
and businesses aren't put in those risky positions as we
saw this year.
Speaker 1 (05:58):
Minister, if you wouldn't mind. Would you mind taking it
energy hat off and just putting your local government hat
on just for a quick moment. What did you think
about Wellington City Council's decision on the airport shares yesterday?
Do you think the Government will end up.
Speaker 2 (06:09):
INTERVENI well, look, I think it's concerning. Ultimately, it's a
significant decision to make a significant it's a significant change,
will propose change to their long term plan. My concerns
for Wellington ratepayers and the potential impact this may have
on their rates bills. They've already received one of the
highest rates bills in the country and so look, the
(06:30):
Government's keeping an eye on what's happening here. Councils are
able to amend their long term plans. But what I
would say is this is concerning. It is a significant change.
I'm concerned about what the impact it will have on
Wellington ratepayers who are wanting to have a council which
is focused on making long term decisions and actually sticking
to them rather than constantly changing their minds.
Speaker 1 (06:53):
Energy Minister Simon Brown, thank you very much for your time.
I appreciate it.
Speaker 2 (06:57):
For more from Heather Duplissy Allen Drive and live to
news talks. It'd be from four pm weekdays, or follow
the podcast on iHeartRadio.
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