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Source: New Zealand Government

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 It is a pleasure to be here tonight.  Thank you Graeme (Peters, ENA Chief Executive) for the introduction.

Two years ago I launched the ENA’s Network Transformation Roadmap in a venue not far from this one. 

It was designed to support lines companies to prepare for significant changes in the energy sector as consumers adopt new technologies.

While traditionally electricity has flowed in one direction only across the network, increasingly, with distributed generation such as solar, networks have to be capable of supporting two-way flows.

These changes and their knock on effects to how we consume electricity are likely to have a profound impact on the industry in the next 30 years.

So how do we continue preparing for disruption while unlocking the benefits? Enabling new technologies has the potential to greatly lower the cost of electrification. And it will be critical to managing peak demand and supporting increased renewable electricity generation as we decarbonise our energy system.

Since the launch of the Roadmap, there has been a much greater focus on reducing carbon emissions in the medium to long term.

This government was re-elected with a strong mandate to tackle climate change, there was multi-party support for the Zero Carbon Act, the Climate Change Commission is up and running, and it will deliver its final advice to Ministers before May 31, with government decisions due by the end of the year.

When I launched the Roadmap, the intent was not that it would be a flash in the pan. It would be continually updated and improved as the environment changed.

So it gives me pleasure to note the first formal review of the Network Transformation Roadmap has been undertaken. The review has been carried out by specialist energy consultant Dr Alan Miller, who was the original author of the roadmap.

But the review was not the work of one person. It involved detailed interviews with ENA member companies to discover what they had been doing individually and collectively on their own transformation journey.

I congratulate ENA member companies on reviewing this important planning document, and look forward to the seeing the continued progress toward a low-carbon future. There is no time to waste.

I understand that the level of change and work required of electricity distribution businesses is high. However rapid and continual progress is needed to ensure we can meet our long term climate targets. As a Government we understand the importance of our energy sector in the transition to a carbon neutral economy by 2050 and the crucial role industry participants play in this transition.  We are working now to ensure we have the right regulatory settings in place to support this change.

The Government is developing the first Emissions Reduction Plan which incorporates sector specific policies to meet the first emissions budget for 2022 to 2025. This will be in place by the end of the year.

In parallel work is underway to develop Emissions Reductions Plans for the next two emissions budgets which will take us to 2035. 

There is a significant amount of work to be done across Government and regulatory agencies. I would like to acknowledge the work of the Electricity Authority and the Commerce Commission to ensure we have the settings right to support increased electrification of the economy, by ensuring we have the right incentives in place to encourage innovation and the adoption of new technology.   

As you all know, the Electricity Price Review recommended phasing out the Low Fixed Charge regulations as they are poorly targeted and have unintended consequences for many households. It’s clear that the existing regulations also pose a challenge for distribution pricing reform.

The Electricity Authority’s 2020 Distribution Pricing Scorecards highlighted that progress towards more efficient pricing has stalled due to the Low Fixed Charge Regulations.

Getting distribution pricing right will be vital as New Zealand looks to decarbonise the economy through increased electrification, and in making sure investment in new technology happens in the right place on the network.

Efficient distribution pricing reforms will also help to provide the right incentives for consumers to install decentralized energy resources. This will help ensure they get benefits that can match the technology costs and aren’t receiving subsidies from other consumers.

My officials have engaged with the ENA, along with others in the industry, to help design a phase-out mechanism for the low fixed charge regulations.  

I have been clear that I am concerned about the potential for a phase out to increase costs for households that use little electricity, and are already in energy hardship but I am aware that the industry would like certainty on the future of the regulations by the end of June 2021. I am keeping this date in mind.

While I have instructed officials to develop measures to limit any adverse impacts of a phase out of the regulations for those in energy hardship, I also expect the industry to take a prominent role in ensuring a smooth transition that supports vulnerable consumers.

It is extremely important to me that consumers are supported as we transition to a low carbon economy. Significant progress has been made implementing the Electricity Price Review recommendation to support consumers in energy hardship.

The Government is well-advanced in establishing the new Consumer Advocacy Council to provide evidence-based advocacy for residential and small business electricity consumers. We expect to appoint the Chair in the near future, and then move on to appoint Council members and establish the secretariat.

We are establishing an Energy Hardship Expert Panel, to bring together four to five individuals that collectively have key perspectives and expertise on energy hardship, have a good working knowledge of the drivers of energy hardship and are connected across government, industry and the NGO sectors.

The Panel will recommend policy priorities and actions to alleviate energy hardship in New Zealand.

We are currently working through our appointment process for the Expert Panel, and decisions will proceed to Cabinet for approval. We are also in the process of holding a series of online energy hardship forums, including an online hui with iwi, to share information and gather advice and possible solutions.

We have made progress drafting a definition of energy hardship and associated indicators to help measure and track energy hardship over time. Public consultation on a draft definition will be undertaken in coming months.

The Support for Energy Education in Communities (SEEC) Programme is part of a suite of new government initiatives to lift people out of energy hardship and will provide funding to help more people have warmer homes and lower energy bills. A total of up to $1.26 million is available in the first funding round which closed on 9 February. MBIE had a huge response – and it was pleasing to see a diverse range of initiatives across the applications. Announcements on the successful applications will be made soon.

A $28 million Māori and Public Housing Renewable Energy Fund has been established to trial small-scale renewable energy technologies. The funding for Māori housing projects will be allocated over four years until mid-2024 through an open application process. The Government recently sought and received a large number of Expressions of Interests and applicants will shortly be advised on the outcome of their application and next steps.

 Another policy area we are working on is the Electricity (Hazards from Trees) Regulations, which regulates tree trimming near power lines, helping protect electricity supply and public safety.

And I understand you have concerns about the adequacy of the Regulations.

Officials at MBIE have been undertaking a review of them and I appreciate the input from the EEA, ENA and its members have put into this review.

The issues relating to these hazards are complex and MBIE officials are drafting a discussion document. I expect to be able to release this for consultation later this year.  I look forward to hearing feedback from the ENA and its members through this process.

So, to wrap up, while it’s not without its challenges, it is a very momentous time to be involved in the energy sector right now, and I would like to acknowledge all the important work the Electricity Networks Association is doing as we take significant steps toward decarbonising our economy.

I would like to thank again for your invitation and for giving me the opportunity to speak to you tonight.

 

MIL OSI