Why National should support Gareth Hughes’ bill at first reading

has a bill up for first reading soon called the Electricity Industry (Small-Scale Renewable Distributed Generation) Amendment Bill.

I hope the Government/National votes for the bill at first reading, for three reasons.

  1. It is a (fairly rare) constructive opposition bill that has identified an issue, and is not proposing a solution that is just designed to get National to vote against it
  2. While the bill’s solution may not be the best answer to the problem, even having select committee hearings into the bill may lead to better outcomes with pressure on energy companies
  3. National would gain kudos for supporting a bill which could encourage more people to sell surplus solar back into the grid.

This Stuff article highlights the current problem:

“The bill is trying to fix a serious problem, which is that thousands of Kiwis are going solar and finding the electricity companies have all the power.

“My bill would empower the Electricity Authority to act as an independent umpire to make sure that solar consumers get a fair go,” Hughes said.

At present companies set the price when they buy back electricity from customers who generate more power than they use.

Hughes said Meridian Energy used to pay 26 cents per kilowatt hour to consumers who had generated extra electricity, but were now paying between 8 and 10c.

DC Power business manager Sarah Laurence said the pricing was discouraging consumers from going solar.

The company installed solar panels for Barbara and Atsushi Taniyama at their Palmerston North restaurant Yatai. Laurence said expansion could have been on the cards if the buy-back price was certain.

“The dropping price has prevented them from putting in a bigger system,” Laurence said.

So the problem with the status quo is that prices for buying back excess solar have dropped by around two thirds, and there is no price certainty.

A further Stuff article explains:

Almost every region had different rules, regulations and need for resource consents in order to install solar panels, Hughes said.

And alongside that, power companies held the literal and metaphorical power when it came to setting buy-back rates. Hughes said rates had fluctuated from 17 cents to as low as 4 cents, without more than a month’s notice, leaving those signed onto solar energy in a constant state of uncertainty, he said. 

“I’m not asking for it to subsidised, I’m proposing the Electricity Authority to act as an independent umpire and set a fair and reasonable buy-back rate.” 

Now I’m not convinced that having the Electricity Authority set the rate will be the best solution, as I’d like to see power companies compete to offer the best rates for buying back surplus solar.

But I think it is a reasonable option that should be considered by a select committee. A select committee could hear from solar users and hear from energy companies, and consider the size of the problem, and what the best solution is.

As I said above, just the scrutiny of the select committee may be enough to get some companies to offer better terms – that might not even be higher rates, but guaranteed price stability over a period of time.

I also think it is good to be constructive with an opposition bill, when it is not proposing something hugely expensive, or is just trying to make the Government vote against something for scaremongering purposes (such as Clayton Cosgrove’s ludicrous bill to stop the Government selling Kiwibank).

So I hope the National caucus decides to back the bill at first reading. There will be many grateful solar users if they do decide this is an issue worth select committee scrutiny.

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