Bill overhauls electricity industry

Parliament has passed legislation designed to increase competition in the electricity industry but the Government isn't promising lower prices.

The Electricity Industry Bill was the result of a ministerial review of the sector, ordered partly because prices had risen significantly over the last decade.

"There had been widespread dissatisfaction with its performance and with relentless price rises," John Carter told Parliament on behalf of Energy Minister Gerry Brownlee.

"This bill aims to increase the level of competition, particularly in retailing and particularly in the South Island, and it aims to put strong incentives on the industry to better manage security of supply."

Mr Carter said a main objective was to compel state-owned generators Meridian, Mighty River Power and Genesis to compete nationwide and to back this up some of their assets were being swapped with Meridian's Tekapo A and B stations transferred to Genesis.

The bill also replaces the Electricity Commission with a new, independent Electricity Authority.

"The new authority will have to focus on getting the rules right with the objective of improving competition, reliability and efficiency," Mr Carter said.

"We are confident it will deliver a more competitive, more responsible and more responsive electricity sector, but we cannot promise lower prices."

Mr Carter said there were upward pressures on electricity costs, particularly the need to build new power stations and lines.

He said more than $1 billion would have to be invested each year to replace assets that were getting older.

Labour's Nanaia Mahuta said her party was opposing the bill because it didn't do anything to restrain prices and didn't focus on sustainable generation.

"Our key concern is the ongoing pressure that households are feeling regarding their monthly power bills," she said.

"The code that guides the Electricity Authority should be changed to include fair consumer pricing and sustainable generation."

Ms Mahuta said there was no evidence assets swaps would achieve anything, and they could result in less efficiency, not more.

Ms Mahuta's colleague Chris Hipkins said there was no business case for the asset swaps and the Government was getting the state-owned generators ready for privatisation.

The bill passed its third reading on a vote of 66 to 49.




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