1 00:00:05,800 --> 00:00:09,000 Speaker 1: Kyoda. I'm Chelsea Daniels and This is the Front Page, 2 00:00:09,400 --> 00:00:17,639 Speaker 1: a daily podcast presented by The New Zealand Herald. Back 3 00:00:17,640 --> 00:00:19,919 Speaker 1: in May, on the Front Page, in the wake of 4 00:00:20,079 --> 00:00:24,319 Speaker 1: warnings about overuse of the power grid, we discussed what 5 00:00:24,640 --> 00:00:28,600 Speaker 1: challenges faced the Energy Center for the winter ahead. Over 6 00:00:28,640 --> 00:00:32,000 Speaker 1: the last few weeks, those challenges have become more and 7 00:00:32,200 --> 00:00:37,800 Speaker 1: more apparent, with diminishing supply sparking rising power prices across 8 00:00:37,840 --> 00:00:41,280 Speaker 1: the country. It's prompted the government to this week announce 9 00:00:41,440 --> 00:00:46,440 Speaker 1: it is fast tracking a new liquefied natural gas import terminal, 10 00:00:46,720 --> 00:00:53,520 Speaker 1: amongst other measures. So what's behind this latest energy crisis 11 00:00:53,840 --> 00:00:57,080 Speaker 1: and what can the government do to stop it? Today 12 00:00:57,080 --> 00:00:59,760 Speaker 1: on the Front Page, we're joined again by the Major 13 00:01:00,000 --> 00:01:10,480 Speaker 1: Electricity Users Group chair John Harbord to analyze this latest crisis. John, 14 00:01:10,760 --> 00:01:14,160 Speaker 1: let's start with the obvious. What's going on with the 15 00:01:14,160 --> 00:01:15,440 Speaker 1: power prices at the moment. 16 00:01:15,800 --> 00:01:19,399 Speaker 2: It's a combination of two things. One is longer term 17 00:01:20,040 --> 00:01:23,720 Speaker 2: we actually don't know. In the shorter term, it's very 18 00:01:23,760 --> 00:01:28,119 Speaker 2: clear that we have a scarcity of energy with which 19 00:01:28,160 --> 00:01:31,440 Speaker 2: to make electricity, so our hydro lake levels are low. 20 00:01:32,080 --> 00:01:34,640 Speaker 2: We've got less gas available than we thought we did. 21 00:01:35,120 --> 00:01:38,120 Speaker 2: And partly just because it's winter. You know, solar generation 22 00:01:38,240 --> 00:01:40,520 Speaker 2: is down just because of the number of daylight hours 23 00:01:40,520 --> 00:01:43,120 Speaker 2: we have in winter. And we've had sort of periods 24 00:01:43,160 --> 00:01:46,600 Speaker 2: where wind levels in the places of the country where 25 00:01:46,640 --> 00:01:50,440 Speaker 2: we generate wind electricity have also been down. And when 26 00:01:50,440 --> 00:01:53,680 Speaker 2: something gets incredibly scarce, the price goes through the roof, 27 00:01:54,000 --> 00:01:57,040 Speaker 2: and that's seen wholesale prices go from you know, three 28 00:01:57,160 --> 00:01:59,600 Speaker 2: four hundred dollars a mega wad hour, you know, going 29 00:01:59,680 --> 00:02:02,800 Speaker 2: up one thousand dollars a Mega white hour. The longer 30 00:02:02,920 --> 00:02:07,000 Speaker 2: term issue is we had an outage at the Papakurr 31 00:02:07,120 --> 00:02:09,960 Speaker 2: gas field back in twenty eighteen. So when the gas 32 00:02:10,000 --> 00:02:13,280 Speaker 2: field went down, the wholesale electricity price jumped from around 33 00:02:13,320 --> 00:02:16,480 Speaker 2: seventy five eighty dollars a Mega white hour to almost 34 00:02:16,520 --> 00:02:19,280 Speaker 2: twice that. But when the gas field came back online, 35 00:02:19,360 --> 00:02:22,600 Speaker 2: the price stayed up, and it stayed up for the 36 00:02:22,680 --> 00:02:25,120 Speaker 2: last six years. So that price has been averaging around 37 00:02:25,120 --> 00:02:27,040 Speaker 2: one hundred and fifty to one hundred and sixty dollars 38 00:02:27,080 --> 00:02:30,280 Speaker 2: a Mega white hour for the last six years. And 39 00:02:30,320 --> 00:02:33,320 Speaker 2: the electricity authority had a look at it probably three 40 00:02:33,400 --> 00:02:36,600 Speaker 2: years ago now and they couldn't explain why the price 41 00:02:36,639 --> 00:02:38,920 Speaker 2: had stayed up as high as it was now, I 42 00:02:38,919 --> 00:02:41,480 Speaker 2: think there's a legitimate question or criticism that they didn't 43 00:02:41,520 --> 00:02:43,040 Speaker 2: do anything about that. They just sort of made a 44 00:02:43,080 --> 00:02:47,000 Speaker 2: finding and carried on. So lots of people have different 45 00:02:47,040 --> 00:02:49,840 Speaker 2: theories on why the price is high, but we don't 46 00:02:49,840 --> 00:02:52,959 Speaker 2: have a really rigorous examination of it, which is why 47 00:02:52,960 --> 00:02:54,120 Speaker 2: I say we don't actually know. 48 00:02:54,639 --> 00:02:57,800 Speaker 1: What does this crisis mean generally for the average Keiwi. 49 00:02:57,919 --> 00:03:00,960 Speaker 1: Is it simply that their bills are going to Yeah. 50 00:03:01,040 --> 00:03:04,880 Speaker 2: I think it's important to note that most Kiwis are 51 00:03:04,960 --> 00:03:09,840 Speaker 2: on fixed term retail plans with their electricity retailer. So 52 00:03:09,960 --> 00:03:13,760 Speaker 2: while their current contract is in effect, they're probably not 53 00:03:13,760 --> 00:03:17,120 Speaker 2: noticing too much right at this very moment. But the 54 00:03:17,160 --> 00:03:20,000 Speaker 2: next time their plan gets renewed, you know, households could 55 00:03:20,040 --> 00:03:22,079 Speaker 2: be in for a bit of a shock. But ultimately, 56 00:03:22,120 --> 00:03:25,000 Speaker 2: the high wholesale prices do get passed on to households 57 00:03:25,040 --> 00:03:28,120 Speaker 2: to a degree. We do know that the Big four 58 00:03:28,520 --> 00:03:32,480 Speaker 2: Gen Taylors have been running their retail arms at a 59 00:03:32,480 --> 00:03:37,320 Speaker 2: loss deliberately, and that has shielded households from a lot 60 00:03:37,360 --> 00:03:43,040 Speaker 2: of the impacts that larger manufacturers are experiencing. Shane Jones 61 00:03:43,080 --> 00:03:45,600 Speaker 2: is accusing the big power companies of profit tearing as 62 00:03:45,600 --> 00:03:47,080 Speaker 2: big firms layoff workers. 63 00:03:47,360 --> 00:03:50,800 Speaker 3: The energy prices at the moment offered by Gen Taylors 64 00:03:51,080 --> 00:03:54,000 Speaker 3: are the highest in the western world. The gent tailors 65 00:03:54,120 --> 00:03:58,600 Speaker 3: have promised for so long that they can boost energy security. 66 00:03:58,720 --> 00:03:59,960 Speaker 3: The shar shows. 67 00:03:59,800 --> 00:04:00,640 Speaker 2: That they've failed. 68 00:04:01,000 --> 00:04:04,240 Speaker 3: We've got to a point where not only a deep dive, 69 00:04:05,120 --> 00:04:06,840 Speaker 3: but the time for talk is over. 70 00:04:09,880 --> 00:04:13,000 Speaker 1: The words price gouging have been thrown around a lot 71 00:04:13,040 --> 00:04:15,640 Speaker 1: in this crisis, so those accusations fair. 72 00:04:15,880 --> 00:04:18,400 Speaker 2: I think what I would say is there is a 73 00:04:18,480 --> 00:04:21,520 Speaker 2: basis on which to make those allegations. So if I 74 00:04:21,600 --> 00:04:26,080 Speaker 2: unpicked that. Back in two thousand and nine, the Commerce 75 00:04:26,080 --> 00:04:30,800 Speaker 2: Commission reviewed the wholesale market and found that prices were 76 00:04:30,880 --> 00:04:33,960 Speaker 2: higher than they would be in a competitive market because 77 00:04:34,000 --> 00:04:37,600 Speaker 2: the big four generators had market power and they were 78 00:04:37,720 --> 00:04:40,360 Speaker 2: using it to keep prices higher. And I want to 79 00:04:40,360 --> 00:04:42,599 Speaker 2: stress though, the Commerce Commission also found there was nothing 80 00:04:42,640 --> 00:04:45,719 Speaker 2: unlawful happening, so there's no no one's breaking any laws 81 00:04:45,800 --> 00:04:49,280 Speaker 2: or anything like that. And there were a suite of 82 00:04:49,720 --> 00:04:52,599 Speaker 2: independent studies that followed that that all found pretty much 83 00:04:52,600 --> 00:04:56,039 Speaker 2: the same thing. The Electricity Authority itself again in that 84 00:04:56,080 --> 00:04:58,280 Speaker 2: same piece of work two or three years ago. They 85 00:04:58,360 --> 00:05:00,920 Speaker 2: also found that same thing, that the big four generators 86 00:05:00,960 --> 00:05:04,600 Speaker 2: have some market power and prices are higher because of that. 87 00:05:05,240 --> 00:05:09,800 Speaker 2: MUTE itself commissioned some work around analyzing the level of 88 00:05:09,920 --> 00:05:13,799 Speaker 2: economic profit, and we certainly found that in some cases 89 00:05:13,839 --> 00:05:17,480 Speaker 2: there's evidence of that of very high levels of economic profit, 90 00:05:17,600 --> 00:05:20,000 Speaker 2: but it wasn't across all generators, So I think we 91 00:05:20,040 --> 00:05:22,919 Speaker 2: also need to be careful that we don't make blanket 92 00:05:22,920 --> 00:05:24,760 Speaker 2: allegations across all generators. 93 00:05:25,200 --> 00:05:28,760 Speaker 1: The phrase gen Taylor's, and you've mentioned it once now 94 00:05:28,839 --> 00:05:31,320 Speaker 1: it pops up a lot during the coverage. What is 95 00:05:31,440 --> 00:05:32,280 Speaker 1: a gen Taylor? 96 00:05:32,520 --> 00:05:36,200 Speaker 2: Yeah, so it's basically referring to the four big companies 97 00:05:36,240 --> 00:05:39,760 Speaker 2: we have that do both generation and who do retail. 98 00:05:39,800 --> 00:05:43,240 Speaker 2: So you just combine gen with Taylor from retail, and 99 00:05:43,279 --> 00:05:45,640 Speaker 2: we mash it together to make a single word. It's 100 00:05:45,680 --> 00:05:48,320 Speaker 2: a recognition that they make electricity and they sell it 101 00:05:48,360 --> 00:05:49,040 Speaker 2: to households. 102 00:05:49,520 --> 00:05:52,680 Speaker 1: So how have these Gen Taylors responded to all of this? 103 00:05:52,839 --> 00:05:54,640 Speaker 1: You mentioned they're actually running at a loss. 104 00:05:55,040 --> 00:05:57,480 Speaker 2: They've been running their retail arms at a loss. Their 105 00:05:57,520 --> 00:06:00,760 Speaker 2: generation arms over the last few years have certainly been 106 00:06:00,760 --> 00:06:03,720 Speaker 2: making very high levels of profit. Some of the Big 107 00:06:03,720 --> 00:06:07,120 Speaker 2: four have been running you know, almost all time record 108 00:06:07,160 --> 00:06:09,960 Speaker 2: profits year after year for some of the recent periods. 109 00:06:09,960 --> 00:06:12,400 Speaker 2: So there's like I said, there is certainly a basis 110 00:06:12,440 --> 00:06:15,440 Speaker 2: on which to make those allegations. But equally, we haven't 111 00:06:15,440 --> 00:06:18,799 Speaker 2: had a really rigorous analysis, like from say the Commerce 112 00:06:18,839 --> 00:06:21,240 Speaker 2: Commission into that issue. So like I said, there's there's 113 00:06:21,240 --> 00:06:23,960 Speaker 2: certainly a basis to make those claims. There's certainly evidence 114 00:06:24,000 --> 00:06:25,880 Speaker 2: of it, but I just think you also just need 115 00:06:25,880 --> 00:06:27,680 Speaker 2: to be a little bit careful that, you know, we're 116 00:06:27,680 --> 00:06:31,280 Speaker 2: not applying that allegation equally to everybody. Some of it 117 00:06:31,680 --> 00:06:34,400 Speaker 2: could just be you know, a combination of fact is 118 00:06:34,440 --> 00:06:36,760 Speaker 2: almost sort of beyond the control a little bit of 119 00:06:36,800 --> 00:06:40,160 Speaker 2: some of these companies. So you know, if you are Meridian, 120 00:06:40,200 --> 00:06:42,600 Speaker 2: for example, and I'm not using them to shine a 121 00:06:42,680 --> 00:06:43,919 Speaker 2: light on them, this is in the sense of, you know, 122 00:06:43,960 --> 00:06:46,120 Speaker 2: a lot of their generation assets were built back in 123 00:06:46,480 --> 00:06:49,480 Speaker 2: the nineteen sixties, you know, the big hydro dams in 124 00:06:49,520 --> 00:06:52,799 Speaker 2: the nineteen seventies and nineteen eighties, and they've been built 125 00:06:52,800 --> 00:06:54,839 Speaker 2: to a very high standard, so you know, they haven't 126 00:06:54,880 --> 00:06:56,840 Speaker 2: had to spend a lot of money on new generation 127 00:06:57,200 --> 00:07:00,440 Speaker 2: until more recently. So because they're not spending that money 128 00:07:00,480 --> 00:07:03,320 Speaker 2: on new generation, then kind that looks like their revenue 129 00:07:03,320 --> 00:07:05,280 Speaker 2: is higher as a result of it. That's not to 130 00:07:05,320 --> 00:07:08,719 Speaker 2: say they're doing anything unlawful or anything dodgy. It's just 131 00:07:08,800 --> 00:07:10,600 Speaker 2: the fact of, you know, the assets that as a 132 00:07:10,600 --> 00:07:14,360 Speaker 2: business they inherited. But there's no doubt that some gen 133 00:07:14,560 --> 00:07:18,160 Speaker 2: taylors have been earning very high levels of profit in 134 00:07:18,200 --> 00:07:21,200 Speaker 2: recent years. And it's particularly concerning in the sense of 135 00:07:21,320 --> 00:07:24,480 Speaker 2: electricity is in the truest sense of the word a 136 00:07:24,560 --> 00:07:27,680 Speaker 2: public good. You know, we can't have modern life without it. 137 00:07:27,920 --> 00:07:31,880 Speaker 2: Our households don't function without electricity, and our demand for 138 00:07:31,920 --> 00:07:34,880 Speaker 2: it is highly anelastic. And by that I just mean 139 00:07:34,920 --> 00:07:36,400 Speaker 2: you don't have a lot of control over how much 140 00:07:36,440 --> 00:07:39,160 Speaker 2: electricity you use. You've got to have showers, you've got 141 00:07:39,200 --> 00:07:40,880 Speaker 2: to cook your meals, you've got to heat your home 142 00:07:41,360 --> 00:07:43,160 Speaker 2: unless you just simply can't afford it. There's not a 143 00:07:43,200 --> 00:07:45,800 Speaker 2: lot of discretion in there around how much electricity you use, 144 00:07:46,440 --> 00:07:49,120 Speaker 2: so you've kind of got a captive consumer market. So 145 00:07:49,200 --> 00:07:51,720 Speaker 2: it's important that people can have confidence that the price 146 00:07:51,760 --> 00:07:55,360 Speaker 2: they're paying is fair. And I don't think the government 147 00:07:55,440 --> 00:07:57,440 Speaker 2: or the regulators could say hand on heart at the 148 00:07:57,480 --> 00:08:00,880 Speaker 2: moment that prices have been fair for the last six years, 149 00:08:00,960 --> 00:08:02,400 Speaker 2: let alone in the current situation. 150 00:08:12,840 --> 00:08:15,640 Speaker 1: A review of the performance of the electricity market is 151 00:08:15,680 --> 00:08:19,360 Speaker 1: being jointly conducted by the Commerce Commission and the Electricity 152 00:08:19,400 --> 00:08:23,480 Speaker 1: Authority At the moment, what do you think that might reveal. 153 00:08:24,160 --> 00:08:27,040 Speaker 2: We haven't seen the terms of reference for it, so 154 00:08:27,080 --> 00:08:29,200 Speaker 2: I'm not entirely for exactly what they're looking at. But 155 00:08:29,240 --> 00:08:33,240 Speaker 2: if I assume it's a general review of electricity market regulation, 156 00:08:34,000 --> 00:08:37,400 Speaker 2: then I think on the basis of past work, we're 157 00:08:37,559 --> 00:08:40,360 Speaker 2: likely to have a finding that prices are higher in 158 00:08:40,400 --> 00:08:43,800 Speaker 2: New Zealand because of a lack of meaningful competition in 159 00:08:43,800 --> 00:08:46,960 Speaker 2: the generation space. Now we hope that changes over time 160 00:08:46,960 --> 00:08:50,199 Speaker 2: with more generators entering the market and from the announcements, 161 00:08:50,360 --> 00:08:54,319 Speaker 2: distribution companies can potentially start generating as well. But it's 162 00:08:54,320 --> 00:08:56,240 Speaker 2: also a reflection of New Zealand's a small country. We 163 00:08:56,280 --> 00:08:58,040 Speaker 2: don't have a lot of operators in that space, so 164 00:08:58,320 --> 00:09:00,720 Speaker 2: you know, regardless of the finding, not much might change 165 00:09:00,720 --> 00:09:03,600 Speaker 2: in that space. But you've also got to unpick how 166 00:09:03,760 --> 00:09:07,640 Speaker 2: we arrive at the wholesale electricity price. So the current 167 00:09:07,679 --> 00:09:11,239 Speaker 2: market settings are very good at pricing short term scarcity 168 00:09:11,559 --> 00:09:15,880 Speaker 2: or short term availability of electricity. What it's not very 169 00:09:15,880 --> 00:09:19,680 Speaker 2: good at is taking sort of a longer run view 170 00:09:20,080 --> 00:09:23,000 Speaker 2: of pricing. So our prices tend to be high because 171 00:09:23,040 --> 00:09:25,480 Speaker 2: everyone in the short term seeds risk, whereas if you're 172 00:09:25,480 --> 00:09:28,160 Speaker 2: taking a longer term view, risk sort of gets evened 173 00:09:28,160 --> 00:09:31,600 Speaker 2: out over time. So I would hope that we've come 174 00:09:31,640 --> 00:09:33,800 Speaker 2: to some things that would end up with the market 175 00:09:33,840 --> 00:09:37,200 Speaker 2: taking a longer view. There's also a really important question 176 00:09:37,320 --> 00:09:41,120 Speaker 2: around how we arrive at the wholesale price. So at 177 00:09:41,120 --> 00:09:44,760 Speaker 2: the moment, if you're a generator and say you're generating 178 00:09:45,040 --> 00:09:50,880 Speaker 2: wind or hydro electricity, because roughly speaking, supply of electricity 179 00:09:50,920 --> 00:09:54,600 Speaker 2: matches the demand for that electricity. Genuinely speaking, if you're 180 00:09:54,640 --> 00:09:57,120 Speaker 2: generating electricity, you know you can kind of sell whatever 181 00:09:57,160 --> 00:10:00,240 Speaker 2: you're making. So what it is is you price up 182 00:10:00,280 --> 00:10:03,600 Speaker 2: to the most expensive form of electricity. So in New Zealand, 183 00:10:03,600 --> 00:10:07,000 Speaker 2: the most expensive form of electricity is coal fired electricity 184 00:10:07,520 --> 00:10:11,200 Speaker 2: because almost half the cost is from the ETES. But 185 00:10:11,280 --> 00:10:14,400 Speaker 2: if you're making wind electricity, you're not paying any ETES costs. 186 00:10:14,480 --> 00:10:17,400 Speaker 2: You just make a massive profit at the expense of consumers. 187 00:10:17,840 --> 00:10:20,000 Speaker 2: So I would hope that it would look at what's 188 00:10:20,040 --> 00:10:25,440 Speaker 2: the regulation around renewable electricity versus thermal electricity, and do 189 00:10:25,520 --> 00:10:30,240 Speaker 2: you sort of decouple the two. So renewable generators aren't 190 00:10:30,240 --> 00:10:33,360 Speaker 2: making excess profit at the expense of consumers because they 191 00:10:33,440 --> 00:10:36,000 Speaker 2: don't have to pay etes costs. Equally, I think one 192 00:10:36,040 --> 00:10:39,359 Speaker 2: of the things that the current crisis has really highlighted 193 00:10:39,840 --> 00:10:42,800 Speaker 2: is the market is very poor at taking an nz 194 00:10:42,960 --> 00:10:47,880 Speaker 2: INK approach or perspective. So individual generators, you know, they're 195 00:10:47,920 --> 00:10:50,920 Speaker 2: looking at what's the new generation we can build, and 196 00:10:51,000 --> 00:10:54,280 Speaker 2: often that you're looking at wind or solar if for 197 00:10:54,360 --> 00:10:56,600 Speaker 2: no other reason, then you've got a chance of getting 198 00:10:56,640 --> 00:10:59,720 Speaker 2: those consented. But people aren't looking at, well, who's going 199 00:10:59,760 --> 00:11:02,800 Speaker 2: to be say the gas or qualified peaking plant we're 200 00:11:02,840 --> 00:11:05,000 Speaker 2: going to continue to need for the next say ten years, 201 00:11:05,360 --> 00:11:07,880 Speaker 2: because you'd never get it consented. And Equally, a lot 202 00:11:07,920 --> 00:11:10,360 Speaker 2: of companies don't want to be seen to be building 203 00:11:10,600 --> 00:11:14,440 Speaker 2: through more generation because social license and as a country 204 00:11:14,679 --> 00:11:18,240 Speaker 2: we're not particularly keen on emissions. We need some way 205 00:11:18,480 --> 00:11:23,920 Speaker 2: for the market to identify what generations actually required and 206 00:11:23,960 --> 00:11:27,160 Speaker 2: then to incentivize that generation. So I think there's a 207 00:11:27,240 --> 00:11:30,960 Speaker 2: really interesting role there potentially for transparers the system operator 208 00:11:31,679 --> 00:11:34,240 Speaker 2: to do that analysis around what generation mix do we 209 00:11:34,320 --> 00:11:38,320 Speaker 2: need and in what amounts, and then whether it's through 210 00:11:38,360 --> 00:11:41,320 Speaker 2: going to market for contracts to supply that generation, or 211 00:11:41,360 --> 00:11:44,520 Speaker 2: through another mechanism you go back to the market for 212 00:11:44,559 --> 00:11:47,840 Speaker 2: the provision of that generation. But there's no sort of 213 00:11:47,920 --> 00:11:51,160 Speaker 2: coordination at all in the market in that respect. 214 00:11:51,520 --> 00:11:55,960 Speaker 1: The government this week announced a liquefied natural gas import 215 00:11:56,120 --> 00:11:59,080 Speaker 1: terminal will be fast tracked. First of all, what in 216 00:11:59,160 --> 00:12:00,760 Speaker 1: the world does that mean? 217 00:12:00,920 --> 00:12:03,360 Speaker 2: The shorthand version is we just pay for someone to 218 00:12:03,400 --> 00:12:06,280 Speaker 2: send the ship to New Zealand carrying LNG and they 219 00:12:06,360 --> 00:12:08,319 Speaker 2: just sail into port, they hook up to a pipe 220 00:12:08,320 --> 00:12:11,040 Speaker 2: and they pump the gas into our existing network. That's 221 00:12:11,320 --> 00:12:14,920 Speaker 2: fundamentally it. So it's just the means of getting natural 222 00:12:15,000 --> 00:12:17,600 Speaker 2: gas from a means other than our own gas. 223 00:12:17,400 --> 00:12:21,240 Speaker 1: Fields, right, And so LNG is that natural gas? How 224 00:12:21,240 --> 00:12:24,120 Speaker 1: will that help the crisis that we're facing now. 225 00:12:24,480 --> 00:12:26,760 Speaker 2: Well, one of the big constraints we've got at the 226 00:12:26,800 --> 00:12:29,560 Speaker 2: moment that's exacerbating the crisis is we just don't have 227 00:12:29,600 --> 00:12:32,520 Speaker 2: a lot of gas available now. Methods has acted very 228 00:12:32,559 --> 00:12:37,480 Speaker 2: responsibly in ceasing manufacturing of methanol for a few months 229 00:12:37,480 --> 00:12:40,760 Speaker 2: and just basically selling their gas directly to genesis and 230 00:12:40,880 --> 00:12:43,360 Speaker 2: contact to make electricity with. But you know that's not 231 00:12:43,440 --> 00:12:45,439 Speaker 2: a long term future for Method X because then they're 232 00:12:45,480 --> 00:12:48,440 Speaker 2: not actually making any product, So they can't do that indefinitely. 233 00:12:48,840 --> 00:12:53,120 Speaker 2: And until we can unlock more of the gas that 234 00:12:53,200 --> 00:12:55,559 Speaker 2: we know is in our existing gas fields, we need 235 00:12:55,600 --> 00:12:58,720 Speaker 2: sort of a short term solution, and so the government's 236 00:12:58,760 --> 00:13:01,880 Speaker 2: decision will just make it a lot quicker and easier 237 00:13:01,880 --> 00:13:04,840 Speaker 2: for us to bring ships in with LNG and put 238 00:13:04,840 --> 00:13:07,520 Speaker 2: that into our existing system. 239 00:13:08,120 --> 00:13:11,920 Speaker 4: LNG liquefied natural gas is hailed as the magic solution 240 00:13:12,120 --> 00:13:15,559 Speaker 4: to a lot of our problems. In Europe that's getting 241 00:13:15,600 --> 00:13:17,880 Speaker 4: much less gas from Russia. It's supposed to keep the 242 00:13:17,960 --> 00:13:21,360 Speaker 4: lights on. In Asia, it's supposed to do away with 243 00:13:21,440 --> 00:13:24,920 Speaker 4: dirty coal, and in the US katar in Australia, where 244 00:13:24,960 --> 00:13:27,079 Speaker 4: most of the stuff is coming from. It's supposed to 245 00:13:27,160 --> 00:13:29,959 Speaker 4: make a lot of people a lot of money. When 246 00:13:30,000 --> 00:13:32,640 Speaker 4: all a said and done, LNG remains a fossil fuel. 247 00:13:32,800 --> 00:13:35,360 Speaker 4: If we are serious about slowing climate change, we need 248 00:13:35,400 --> 00:13:38,360 Speaker 4: to dig it. The sooner the better, and every terminal 249 00:13:38,400 --> 00:13:40,240 Speaker 4: we build makes that harder. 250 00:13:44,720 --> 00:13:47,560 Speaker 1: The government's blamed a lot of this crisis on labor 251 00:13:47,800 --> 00:13:51,920 Speaker 1: for canceling oil and gas exploration. Labor has responded by 252 00:13:51,920 --> 00:13:55,600 Speaker 1: saying that the part privatization of Gen Taylor's under Sir 253 00:13:55,720 --> 00:13:58,800 Speaker 1: John keyes National, either of them or both of them. 254 00:13:58,760 --> 00:14:01,840 Speaker 2: Right, If we take the first one, the offshore oil 255 00:14:01,880 --> 00:14:04,319 Speaker 2: and gas band, I think that's been a contributing factor. 256 00:14:04,679 --> 00:14:08,880 Speaker 2: It essentially scared off investment and maintenance into our existing fields. 257 00:14:09,280 --> 00:14:12,040 Speaker 2: So because we haven't had that maintenance and we haven't 258 00:14:12,080 --> 00:14:15,600 Speaker 2: had sort of the fresh exploration of existing fields, So 259 00:14:15,640 --> 00:14:18,560 Speaker 2: not even talking about finding new ones, but just ongoing 260 00:14:18,640 --> 00:14:23,400 Speaker 2: exploration of our existing fields. The question around the impact 261 00:14:23,400 --> 00:14:27,400 Speaker 2: of the partial privatization of three of the Gen tailors, 262 00:14:28,040 --> 00:14:31,240 Speaker 2: as I mentioned earlier, you know, the Commerce Commission found 263 00:14:31,280 --> 00:14:34,720 Speaker 2: there were issues with excess pricing in two thousand and 264 00:14:34,800 --> 00:14:39,040 Speaker 2: nine before the partial privatization happened. So I don't think 265 00:14:39,080 --> 00:14:42,880 Speaker 2: we can be as clear cut on the partial privatization question. 266 00:14:43,400 --> 00:14:46,360 Speaker 2: Having said that, though the independent work that the Major 267 00:14:46,400 --> 00:14:50,040 Speaker 2: Electricity Users Group commissioned a couple of years ago into 268 00:14:50,080 --> 00:14:53,920 Speaker 2: the levels of excess economic profit certainly showed in one 269 00:14:54,000 --> 00:14:58,840 Speaker 2: case that the level of economic profit being earned certainly 270 00:14:58,880 --> 00:15:02,680 Speaker 2: started to pick up quite dramatically following the partial privatization 271 00:15:03,240 --> 00:15:05,600 Speaker 2: but that's just looking at one generator, not across the 272 00:15:05,600 --> 00:15:08,120 Speaker 2: whole market, So I think that's still a bit more 273 00:15:08,120 --> 00:15:08,840 Speaker 2: open to debate. 274 00:15:09,200 --> 00:15:13,280 Speaker 1: And John, with winter ending, is this crisis likely going 275 00:15:13,320 --> 00:15:15,680 Speaker 1: to come to an end for the foreseeable future and 276 00:15:15,720 --> 00:15:17,600 Speaker 1: what can be done in the next twelve months to 277 00:15:17,600 --> 00:15:20,600 Speaker 1: stop this happening next winter. I suppose that's a conversation 278 00:15:20,680 --> 00:15:22,040 Speaker 1: we have every year. 279 00:15:22,280 --> 00:15:25,280 Speaker 2: I think it's really important that we recognize that the 280 00:15:25,320 --> 00:15:28,720 Speaker 2: current crisis we're in hopefully sort of the level of 281 00:15:28,800 --> 00:15:33,840 Speaker 2: crisis diminishes, but we're stuck in this situation for a while. 282 00:15:34,160 --> 00:15:37,040 Speaker 2: This is not a short term issue, so the risk 283 00:15:37,160 --> 00:15:41,280 Speaker 2: of rapidly escalating household prices, for instance, is one hundred 284 00:15:41,280 --> 00:15:43,640 Speaker 2: percent still there. And I think, you know, the announcements 285 00:15:43,640 --> 00:15:46,960 Speaker 2: to the government made this week will certainly help in 286 00:15:47,000 --> 00:15:48,880 Speaker 2: the longer term. You know, if we can secure a 287 00:15:48,920 --> 00:15:52,800 Speaker 2: ready supply of gas to supplement our own domestic production 288 00:15:52,840 --> 00:15:56,400 Speaker 2: of gas to make electricity with, that will help, giving 289 00:15:56,960 --> 00:16:00,920 Speaker 2: distribution companies the ability to also generate how tricity. That 290 00:16:01,000 --> 00:16:05,720 Speaker 2: just means potentially we've got more electricity being made. That 291 00:16:05,760 --> 00:16:07,400 Speaker 2: will take some of the pressure off, though that's a 292 00:16:07,440 --> 00:16:11,240 Speaker 2: longer term thing. If we can get the market settings right, 293 00:16:11,760 --> 00:16:14,440 Speaker 2: that will certainly help restore confidence in the market, because 294 00:16:14,480 --> 00:16:18,480 Speaker 2: the confidence is really low. But there's a really crucial 295 00:16:19,000 --> 00:16:22,280 Speaker 2: state that we're in with the electricity system as a whole. 296 00:16:22,800 --> 00:16:26,720 Speaker 2: It's essentially the transition to sort of a lower emissions future. 297 00:16:27,360 --> 00:16:29,120 Speaker 2: And what I mean by that is as we become 298 00:16:29,240 --> 00:16:33,960 Speaker 2: more and more reliant on renewable electricity, particularly wind and solar, 299 00:16:33,960 --> 00:16:36,280 Speaker 2: which is what most of the new generation being built is, 300 00:16:36,760 --> 00:16:40,120 Speaker 2: we have to recognize that they are both highly intermittent 301 00:16:40,360 --> 00:16:44,400 Speaker 2: sources of generation. So an efficient wind farm is making 302 00:16:44,480 --> 00:16:48,360 Speaker 2: electricity about forty percent of the time, and solar generation 303 00:16:49,160 --> 00:16:52,560 Speaker 2: is making electricity even less so for all the time 304 00:16:52,840 --> 00:16:55,200 Speaker 2: when the sun's not shining and the wind's not blowing, 305 00:16:55,800 --> 00:17:00,720 Speaker 2: you need other sources of electricity to fill in the 306 00:17:00,720 --> 00:17:03,280 Speaker 2: gaps for want of a better term. Now, usually we 307 00:17:03,320 --> 00:17:06,200 Speaker 2: rely on the hydro lakes, but often the hydro lakes, 308 00:17:06,280 --> 00:17:07,960 Speaker 2: you know, it seems like every couple of year, every 309 00:17:07,960 --> 00:17:10,320 Speaker 2: two or three years, the hydro lakes are a bit low, 310 00:17:10,480 --> 00:17:12,119 Speaker 2: and so you don't have a lot of options to 311 00:17:12,200 --> 00:17:14,960 Speaker 2: fall back on, which is why we're going to continue 312 00:17:15,040 --> 00:17:19,280 Speaker 2: to need gas and coal for the foreseeable future. I 313 00:17:19,320 --> 00:17:21,160 Speaker 2: think we all hope that we use less and less 314 00:17:21,160 --> 00:17:23,720 Speaker 2: of it, but we're still going to need it. The 315 00:17:23,720 --> 00:17:27,240 Speaker 2: point I make there is the cost of becoming more 316 00:17:27,280 --> 00:17:33,320 Speaker 2: reliant on wind and solder is massive. And that's not 317 00:17:33,359 --> 00:17:36,320 Speaker 2: to say that the cost of building that generation is expensive, 318 00:17:36,359 --> 00:17:40,159 Speaker 2: because it's not relatively speaking. It's all the work you 319 00:17:40,240 --> 00:17:43,879 Speaker 2: have to do to the infrastructure around distribution and the 320 00:17:43,880 --> 00:17:46,720 Speaker 2: rest of it that's really really expensive, because you need 321 00:17:46,760 --> 00:17:49,040 Speaker 2: to shore up all that wind and solar with other 322 00:17:49,080 --> 00:17:51,359 Speaker 2: forms of generation that you have to build, and you 323 00:17:51,440 --> 00:17:54,880 Speaker 2: need the infrastructure to move all the electrons around. So 324 00:17:55,000 --> 00:17:57,840 Speaker 2: there's a real trade off that we're going to have 325 00:17:57,880 --> 00:18:01,800 Speaker 2: to make at some point around affordability and how renewable 326 00:18:01,840 --> 00:18:05,159 Speaker 2: we actually become. And that's in the context of New 327 00:18:05,280 --> 00:18:08,880 Speaker 2: Zealand is either the second or third most renewable electricity 328 00:18:08,880 --> 00:18:11,720 Speaker 2: generation in the world already, so you know, we're all 329 00:18:11,800 --> 00:18:13,280 Speaker 2: ready a world leader. So I don't think we need 330 00:18:13,280 --> 00:18:16,359 Speaker 2: to sort of castigate ourselves too harshly. We're doing a 331 00:18:16,359 --> 00:18:19,399 Speaker 2: pretty good job, so we can always obviously do better. 332 00:18:19,680 --> 00:18:22,040 Speaker 2: There's a balance to be reached about how renewable we 333 00:18:22,160 --> 00:18:26,439 Speaker 2: go and how much sort of thermal firming or peaking 334 00:18:26,440 --> 00:18:28,480 Speaker 2: we keep in the system, and I don't know if 335 00:18:28,480 --> 00:18:30,919 Speaker 2: we've got a really clear picture on that yet, but 336 00:18:31,000 --> 00:18:34,000 Speaker 2: that's a debate or a trade off that's rapidly coming 337 00:18:34,040 --> 00:18:36,439 Speaker 2: towards us, and until we get an answer to that, 338 00:18:37,000 --> 00:18:39,160 Speaker 2: then that's just going to get worse, not better. 339 00:18:39,680 --> 00:18:47,160 Speaker 1: Thanks for joining us, John. That's it for this episode 340 00:18:47,160 --> 00:18:50,000 Speaker 1: of The Front Page. You can read more about today's 341 00:18:50,080 --> 00:18:53,639 Speaker 1: stories and extensive news coverage at zat herold dot co 342 00:18:53,920 --> 00:18:57,479 Speaker 1: dot z. The Front Page is produced by Ethan Seals 343 00:18:57,560 --> 00:19:02,399 Speaker 1: with sound engineer Patty Fox. I'm Chelsea Daniels. Subscribe to 344 00:19:02,440 --> 00:19:05,720 Speaker 1: The Front Page on iHeartRadio or wherever you get your podcasts, 345 00:19:06,040 --> 00:19:09,440 Speaker 1: and tune in tomorrow for another look behind the headlines.