Simon Watts: Energy Minister on the Government's plan for energy reform, procuring a Liquefied Natural Gas facility

The Government’s opting to provide capital to Crown-controlled power companies instead of reshaping its role in the energy sector. 

Genesis, Mercury, and Meridian have been assured funding is available for major infrastructure projects. 

A procurement process for a Liquefied Natural Gas facility has also been launched, which Energy Minister Simon Watts says will start on Monday. 

He told Mike Hosking Cabinet will aim to make a decision by Christmas to get supply into the country as soon as possible. 

Watts says their shortest timeline has supply arriving by Winter of 2027, but if a more traditional route is used, it’s more likely to come by 2028 or 2029.  

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Episode Transcript

Speaker 1 (00:00):
On Power Reform Day. What have we learned? Well, there's
a posived barrier among these state owned gent tailors apparently
when it comes to access to capital. We're moving to
a small degree on LPG as well. The electricity Authority
gets a boost and transpower has a more sophisticated monitoring role. Anyway,
the Energy Minister simon, what's with us, good morning? Do
I want to cover off reasonably quickly LPG? How much

(00:22):
and what's the timeline?

Speaker 2 (00:24):
So we're looking at doing a request proposal for an
importation terminal for LNG. We're going to be releasing that
on the sixth of October, so next week, and we're
going to get those back before Christmas for Cabinet to
make your decision.

Speaker 1 (00:37):
When does LPG arrive in the country.

Speaker 2 (00:40):
On the shortest timeline that we've had, we're looking at
winter twenty seven, but we're going to need to get
proposals through from multinational companies I would expect around what
is possible. It's a complex project and there's a lot
of kiss involved in order to need to be put
in place, but that is the fastest go for a
more traditional route than you're looking probably at twenty eight

(01:03):
twenty nine, but we need that fuel source.

Speaker 1 (01:06):
As far as today's announcements concerned Transpower a more sophisticated
monitoring role, what does that mean.

Speaker 2 (01:13):
Well, look, the reality is right now, we do not
regulate for a dry year effect. We don't regulate for resilience,
and that is an issue that we faced last year.
So I'm going to be instructing Transpower that they will
need to assume a role of making sure that they
are monitoring both a demand and supply in the market,
and where there's a gap, as we experienced last year,

(01:35):
then the EA regulator will need to make sure that
that gap is covered.

Speaker 1 (01:39):
Strengthening the Electricity Authority, how.

Speaker 2 (01:43):
We need to put in place much stronger enforcement powers.
We're going to give it the powers consistent with the
Commerce Commission. That includes the ability to find to have
criminalized certain behavior. At the end of the day, we
need that regulated to be more powerful and have stronger tea.
The Commerce Commission is a good model and the EA
needs to match that. So we'll be putting in changes

(02:06):
to effect that pretty much by early part of next year,
because some of them will require legislation.

Speaker 1 (02:12):
And is this your sop to all of those who
will be disappointed today that you haven't split the gen tailors.

Speaker 2 (02:18):
Tol Look, Mike, let's be fair. The splitting of the
gen tailors is a good politics, but it's not good policy.
It doesn't fix the underlying problem. We've already released and
announced the changes by the Electricity Authority around non discrimination,
which means they can't sell to other people at a
higher price than themselves. That's a material change. The major

(02:40):
issue we're dealing with here is the fact that their
investment in energy sources, thermal etc. To cover a dry
year has not been happening. That's the problem, statement, and
that's why our bundle of solutions and actions that we're taking.
You've got to see this as a package sure to
deal with the shortage of fuel, deal with the fact
that we've got a short generation, and also deal with

(03:01):
the elephant in the room, Mike, which was had sovereign
risk as a result of prior government policy, which is
the most to get you on.

Speaker 1 (03:08):
That's the main thrust of your announcement today. The so
called sovereign risk, a perception the government would not provide
equity injections. Where are they getting that from? And why
didn't you just ring them and say we're in Well, the.

Speaker 2 (03:19):
Reality is, what we're making very clear in the announcement
today is that if the entities require capital in order
to increase generation, then the Crown is prepared to support
capital funding requests for that purpose. We're being very clear
around that to make sure that that perception is not
the reality.

Speaker 1 (03:37):
But how do you debtail that with Mike Fuch, who
we had on earlier on in the program today, said
we've never seen so much investment where we're booming an
investment at the moment.

Speaker 2 (03:46):
Well, Mike, you know, we've got a pretty significant renewable pipeline.
I don't doubt that. But am I seeing that flow
through in terms of the price of energy. No, And
that is what is hitting hard Kiwi households and Kiwi businesses.
That's the issue that we need to deal with. And
this package of announcements and actions, taken as one, is
some of the most significant bundle of energy market package

(04:09):
announcements that we've seen in a long time. It's going
to need to be seen as one package, not as
individual parts, but together we are confident that it will
make a significant impact.

Speaker 1 (04:19):
All right, appreciate your time. Well, wait for the assimon
what's Energy Minister. We'll wait for the reaction from the
state owned Gen Taylor's but from my reading of this,
it's got a so what have we I mean, it's
nothing bad about it. It's not like we've gone backwards.
But there'll be people upset who weren't going to split
the jet, who wanted the gentailer split, which they were
never going to be. So if you're upset about that,

(04:39):
move on, it was never going to happen. The lng thing, yeah,
is that it's not as big as we might have hoped,
because it was one of those ideas floated by Sam
and Brown who was Energy Minister at the time, and
I don't think when he floated it he realized how
big and expensive it logistically challenging it was going to be.
I find it hard to believe that the Gen tailors
were worried about capital raising given the amount of money

(05:01):
that's out there on the market at the moment, and
all they had to do was ring Simon and go, hey, listener,
if we went big on this, could we get some
bacon from the government. They would have said yes. So
I don't know, it's got a lootwarm vibe about it
as far as I can tell.

Speaker 2 (05:14):
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