1 00:00:00,000 --> 00:00:01,840 Speaker 1: And there's a fair bit of disappointment today with the 2 00:00:01,840 --> 00:00:05,640 Speaker 1: government's much hyped energy reforms. Plans announced this morning included 3 00:00:05,680 --> 00:00:09,039 Speaker 1: a new imported gas terminal and the government freeing up 4 00:00:09,039 --> 00:00:11,360 Speaker 1: money for the crown controlled gent tailors to build more 5 00:00:11,400 --> 00:00:14,640 Speaker 1: generation consumer New Zealand. Simon Bridges of the Auckland Chamber 6 00:00:14,680 --> 00:00:16,919 Speaker 1: of Commerce and the opposition parties have all have all 7 00:00:16,920 --> 00:00:19,639 Speaker 1: criticized the plan. Simon, what's the energy ministers with me 8 00:00:19,720 --> 00:00:20,480 Speaker 1: right now? Has Simon? 9 00:00:20,480 --> 00:00:21,880 Speaker 2: Heather you made it in time. 10 00:00:21,920 --> 00:00:22,520 Speaker 1: It's a bit of a run. 11 00:00:22,720 --> 00:00:25,200 Speaker 2: I did I apologize that crash on the bridge. Welcome 12 00:00:25,200 --> 00:00:25,560 Speaker 2: to Auckland. 13 00:00:25,600 --> 00:00:27,400 Speaker 1: Yeah, but at least you're training for a half marriage. 14 00:00:27,440 --> 00:00:28,920 Speaker 2: I'll tell you what. It's great to be here. 15 00:00:29,120 --> 00:00:30,720 Speaker 1: So you had you had the speed to get in. 16 00:00:30,800 --> 00:00:33,160 Speaker 1: Now talk to me about this import terminal. How much 17 00:00:33,159 --> 00:00:33,760 Speaker 1: would it cost? 18 00:00:33,920 --> 00:00:35,599 Speaker 2: Look, we don't have a price on it at this point. 19 00:00:35,640 --> 00:00:37,560 Speaker 2: We're going to go to the market and ask what options. 20 00:00:37,600 --> 00:00:40,440 Speaker 2: It's pretty complex building an importation terminal. You can have 21 00:00:40,640 --> 00:00:43,279 Speaker 2: medium size and large sizes. But we're going to get 22 00:00:43,320 --> 00:00:45,120 Speaker 2: feedback from the market and make a decision on it 23 00:00:45,159 --> 00:00:45,720 Speaker 2: by Christmas. 24 00:00:45,760 --> 00:00:46,960 Speaker 1: Would you go medium or large? 25 00:00:47,000 --> 00:00:49,440 Speaker 2: Well, it depends what's available on the market. We want 26 00:00:49,440 --> 00:00:51,440 Speaker 2: to make sure that we get this terminal in place 27 00:00:51,680 --> 00:00:53,559 Speaker 2: as fast as practical, so we're going to have to 28 00:00:53,800 --> 00:00:56,040 Speaker 2: consider what's available. That most of stuff comes in from 29 00:00:56,040 --> 00:00:56,600 Speaker 2: overseas on. 30 00:00:56,840 --> 00:00:59,800 Speaker 1: Large as a billion dollars. You don't have billion dollars. 31 00:00:59,560 --> 00:01:01,400 Speaker 2: It can come. It can get up to some pretty 32 00:01:01,440 --> 00:01:04,080 Speaker 2: reasonable numbers. Again, the way in which you fund us, 33 00:01:04,680 --> 00:01:06,959 Speaker 2: there are options in the context of other of the 34 00:01:07,000 --> 00:01:09,920 Speaker 2: providers are actually funding it, so you know, we'll be 35 00:01:09,959 --> 00:01:12,000 Speaker 2: looking at the different options. There are scenarios where the 36 00:01:12,040 --> 00:01:16,000 Speaker 2: government don't contribute capital to this model. Who would Well, 37 00:01:16,040 --> 00:01:17,880 Speaker 2: there are models which you can enter into with some 38 00:01:17,920 --> 00:01:20,880 Speaker 2: of these big providers to put in place the terminal, 39 00:01:20,920 --> 00:01:22,080 Speaker 2: and then we need to do They. 40 00:01:21,959 --> 00:01:24,160 Speaker 1: Want to though, because this thing doesn't make any economic sense. 41 00:01:24,200 --> 00:01:25,760 Speaker 1: The gas that comes out of its expensive and the 42 00:01:25,760 --> 00:01:26,440 Speaker 1: way we've done. 43 00:01:26,360 --> 00:01:28,959 Speaker 2: Some market sounding already in regards to that. There is 44 00:01:29,000 --> 00:01:32,080 Speaker 2: some interest out there in regards to that terminal, and 45 00:01:32,120 --> 00:01:32,720 Speaker 2: so we're going to. 46 00:01:33,000 --> 00:01:35,920 Speaker 1: You can turn the funnel. To be fair to you, 47 00:01:35,920 --> 00:01:38,240 Speaker 1: you did have to run in so no surprises a 48 00:01:38,360 --> 00:01:40,800 Speaker 1: loud who would do it if they if they wanted 49 00:01:40,800 --> 00:01:42,760 Speaker 1: to do it, simon, they would have done it already, wouldn't. 50 00:01:42,440 --> 00:01:46,360 Speaker 2: They No, Because the last government had a pretty clear 51 00:01:46,480 --> 00:01:50,840 Speaker 2: policy of you know, shutting down Huntley, shutting down oil 52 00:01:50,920 --> 00:01:54,600 Speaker 2: and gas, which as a result of that left us 53 00:01:54,640 --> 00:01:57,960 Speaker 2: in a pretty desperate situation. Last year. We've come in, 54 00:01:58,000 --> 00:02:00,680 Speaker 2: We've identified the problem. I've got a lack of fuel, 55 00:02:00,680 --> 00:02:02,600 Speaker 2: We're going to lack of generation when we haven't got 56 00:02:02,680 --> 00:02:04,559 Speaker 2: enough water in our dams. And we've got to mash 57 00:02:04,560 --> 00:02:06,840 Speaker 2: the fissue around sovereign risk because of what the last 58 00:02:06,840 --> 00:02:09,359 Speaker 2: guys did and now no one has confidence to be 59 00:02:09,400 --> 00:02:11,480 Speaker 2: able to invest, so we're having to unpick all those 60 00:02:11,520 --> 00:02:13,920 Speaker 2: three elements and the ten point plan them have put 61 00:02:13,960 --> 00:02:15,280 Speaker 2: in place. You've got to look at it as a 62 00:02:15,280 --> 00:02:18,959 Speaker 2: package of interventions. The alergy terminal is one of the interventions, 63 00:02:19,000 --> 00:02:21,400 Speaker 2: but also the regulary model that we're putting in place 64 00:02:21,639 --> 00:02:25,160 Speaker 2: will make sure that the market does have appropriate firming 65 00:02:25,240 --> 00:02:28,240 Speaker 2: capacity in a dry year. At the moment, there's no 66 00:02:28,280 --> 00:02:30,519 Speaker 2: regulation of that in the market. We're going to work 67 00:02:30,560 --> 00:02:33,760 Speaker 2: through the exact regulatory model with the industry and have 68 00:02:33,840 --> 00:02:37,040 Speaker 2: that done by Q one of next year. But in effect, 69 00:02:37,120 --> 00:02:40,160 Speaker 2: we've asked Transpower to look at the demand and supply 70 00:02:40,400 --> 00:02:42,800 Speaker 2: see what the gap is and then the EA regulator 71 00:02:42,840 --> 00:02:44,720 Speaker 2: will enforce and make sure that's gaps come. 72 00:02:44,880 --> 00:02:46,160 Speaker 1: But how do you force them to have firm in 73 00:02:46,200 --> 00:02:48,640 Speaker 1: capacity If they don't, they would already have it if 74 00:02:48,680 --> 00:02:49,800 Speaker 1: they could. 75 00:02:49,960 --> 00:02:53,280 Speaker 2: Currently the market does not regulate to make sure that 76 00:02:53,320 --> 00:02:56,840 Speaker 2: there is appropriate firming capacity to deal with a dry year. 77 00:02:56,880 --> 00:02:58,920 Speaker 1: We're talking about Huntley stockpiling coal. 78 00:03:00,240 --> 00:03:01,840 Speaker 2: Doing that they are, but that is not going to 79 00:03:01,880 --> 00:03:04,480 Speaker 2: be sufficient as we see a significant build out of 80 00:03:04,520 --> 00:03:06,960 Speaker 2: more renewables and the fact that everyone is using a 81 00:03:06,960 --> 00:03:08,880 Speaker 2: lot more electricity than what they have when the. 82 00:03:08,880 --> 00:03:11,600 Speaker 1: Parts, what are your options for firm incapacity, gas and coal. 83 00:03:11,600 --> 00:03:14,639 Speaker 2: Gas and cole That's what we've got and realistically that's 84 00:03:14,680 --> 00:03:15,240 Speaker 2: our options. 85 00:03:15,680 --> 00:03:19,040 Speaker 1: Okay. The money for the gent tailors, which of the 86 00:03:19,080 --> 00:03:21,720 Speaker 1: gentailors are asking for money to help them build generation? 87 00:03:21,960 --> 00:03:23,600 Speaker 2: Well, at this stage we haven't got any of the 88 00:03:23,639 --> 00:03:26,680 Speaker 2: gent tailors asking for money, but the report identified that 89 00:03:26,720 --> 00:03:29,920 Speaker 2: there is a perception that if they did ask government 90 00:03:29,960 --> 00:03:32,200 Speaker 2: the answer would be no. And that's because under the 91 00:03:32,280 --> 00:03:34,120 Speaker 2: last government the answer would have been. 92 00:03:34,040 --> 00:03:36,200 Speaker 1: Some in the not short on money out, They've got 93 00:03:36,240 --> 00:03:38,520 Speaker 1: enough money if they wanted. Well, the reality is they're 94 00:03:38,520 --> 00:03:39,400 Speaker 1: paying it out and dividends. 95 00:03:39,440 --> 00:03:42,200 Speaker 2: Well, the government is a major shareholder and three of 96 00:03:42,240 --> 00:03:45,800 Speaker 2: those entities, and any capital rays needs to be approved 97 00:03:45,840 --> 00:03:48,800 Speaker 2: by government. You know, under the last government they were 98 00:03:48,840 --> 00:03:51,680 Speaker 2: not going to be approving anything with coal or gas 99 00:03:51,760 --> 00:03:55,200 Speaker 2: evenywhere near it. And so we've been very clear to say, look, 100 00:03:55,320 --> 00:03:57,760 Speaker 2: we're going to be able. We will be investing if 101 00:03:57,800 --> 00:03:59,960 Speaker 2: you ask us too, because we need that general. 102 00:04:00,280 --> 00:04:03,160 Speaker 1: Are you wanting them to build more gas generation, more 103 00:04:03,240 --> 00:04:03,920 Speaker 1: cold generation? 104 00:04:04,240 --> 00:04:07,840 Speaker 2: Either we need more generation and in particular another Huntley, 105 00:04:08,080 --> 00:04:11,120 Speaker 2: Absolutely we are. Do they want to Well, the reality 106 00:04:11,160 --> 00:04:13,200 Speaker 2: is we're going to have to replace Huntley by about 107 00:04:13,200 --> 00:04:15,680 Speaker 2: twenty thirty five anyway, because it's coming up. It's about 108 00:04:15,680 --> 00:04:18,159 Speaker 2: sixty years old. So we are going to need to 109 00:04:18,160 --> 00:04:20,920 Speaker 2: think about what that model is in the future. Under 110 00:04:20,920 --> 00:04:24,599 Speaker 2: the last government, there was no certainty Huntley was going 111 00:04:24,640 --> 00:04:26,359 Speaker 2: to close. I don't know how the lights would have 112 00:04:26,360 --> 00:04:28,520 Speaker 2: been stayed on last winter at all if we hadn't 113 00:04:28,520 --> 00:04:30,919 Speaker 2: had Huntly, because I could tell you what they wouldn't have. 114 00:04:31,400 --> 00:04:33,960 Speaker 1: Now, how much cheaper would electricity be if you just 115 00:04:34,000 --> 00:04:34,880 Speaker 1: took it out of the etes? 116 00:04:34,960 --> 00:04:37,480 Speaker 2: Well we know that. Oh well, in regards to the ets, 117 00:04:37,520 --> 00:04:39,960 Speaker 2: we've ruled that out that's not something Why why would 118 00:04:40,000 --> 00:04:42,040 Speaker 2: you do that? Because it's not going to be aligned 119 00:04:42,040 --> 00:04:44,840 Speaker 2: with the government's principles around a credible ets market. And 120 00:04:44,880 --> 00:04:47,560 Speaker 2: also the peer review, we had two international peer reviews. 121 00:04:47,720 --> 00:04:51,200 Speaker 2: They also discredited that and said that wasn't an appropriate 122 00:04:51,240 --> 00:04:54,360 Speaker 2: mechanism because we've got an emissions trading scheme that does 123 00:04:54,760 --> 00:04:58,240 Speaker 2: removes emissions. That's the heavy lifting vehicle the government's committed to. 124 00:04:58,600 --> 00:05:01,440 Speaker 2: And you can't just take electricity city one industry completely 125 00:05:01,480 --> 00:05:05,000 Speaker 2: out of the market and leave it. Electricity impacts every 126 00:05:05,080 --> 00:05:06,920 Speaker 2: part of the market. So it's just not a sensible 127 00:05:07,560 --> 00:05:10,640 Speaker 2: would it be the We don't have an exact indication 128 00:05:10,720 --> 00:05:11,520 Speaker 2: of well, I had. 129 00:05:11,400 --> 00:05:13,760 Speaker 1: A look at said who wholesale prices might come down 130 00:05:13,760 --> 00:05:14,920 Speaker 1: by up to thirty percent. 131 00:05:15,680 --> 00:05:17,800 Speaker 2: That is not numbers that are consistent with the analysis. 132 00:05:18,080 --> 00:05:19,159 Speaker 1: What is the analysis you've seen? 133 00:05:19,360 --> 00:05:21,200 Speaker 2: I definitely have not seen numbers of. 134 00:05:21,080 --> 00:05:23,680 Speaker 1: That scale ten to thirty percent. You haven't seen No. 135 00:05:23,560 --> 00:05:24,240 Speaker 2: I haven't seen that. 136 00:05:24,320 --> 00:05:25,000 Speaker 1: So what have you seen? 137 00:05:25,240 --> 00:05:27,400 Speaker 2: I haven't got the numbers in front of me in 138 00:05:27,440 --> 00:05:30,120 Speaker 2: regards to you don't numbers are but you know they're 139 00:05:30,360 --> 00:05:33,440 Speaker 2: mind whether they're nowhere in the in the spectrum in 140 00:05:33,440 --> 00:05:35,840 Speaker 2: which you're recommending we've got to go back what's all. 141 00:05:36,320 --> 00:05:38,159 Speaker 1: But the point that I'm trying to make here, though, Simon, 142 00:05:38,279 --> 00:05:41,200 Speaker 1: is that you could tomorrow, you could make our electricity 143 00:05:41,200 --> 00:05:43,640 Speaker 1: prices cheaper significantly as opposed to the two percent that 144 00:05:43,680 --> 00:05:46,400 Speaker 1: you're talking about, and it would make a big difference, right, 145 00:05:46,400 --> 00:05:48,080 Speaker 1: because what you're talking about is we've got to have 146 00:05:48,080 --> 00:05:50,800 Speaker 1: a credible climate policy here. At the same time we 147 00:05:50,880 --> 00:05:53,520 Speaker 1: have mills shutting down, we have businesses unable to forward 148 00:05:53,560 --> 00:05:56,560 Speaker 1: their power bills. You have got a crisis on your hands, 149 00:05:56,839 --> 00:05:58,760 Speaker 1: but you want to keep your reputation as a climate 150 00:05:58,960 --> 00:05:59,320 Speaker 1: as a client. 151 00:05:59,360 --> 00:06:02,919 Speaker 2: Problem is that we do not have sufficient fuel to 152 00:06:03,080 --> 00:06:08,480 Speaker 2: power our existing generation gas peakers. In particular today, it 153 00:06:08,520 --> 00:06:10,360 Speaker 2: is a fuel shortage riving. 154 00:06:10,200 --> 00:06:12,560 Speaker 1: Up the price, which is causing mills to shut. 155 00:06:12,360 --> 00:06:14,800 Speaker 2: And we need that fuel. And so the decisions that 156 00:06:14,839 --> 00:06:17,520 Speaker 2: we've announced and the actions were announced today deal with 157 00:06:17,640 --> 00:06:20,720 Speaker 2: the problem. States changing it is going to solve. 158 00:06:20,520 --> 00:06:23,120 Speaker 1: That problem, but it does. What it does is it 159 00:06:23,120 --> 00:06:26,279 Speaker 1: solves the price problem that you've got today as opposed 160 00:06:26,320 --> 00:06:28,040 Speaker 1: to what you're talking about, which is twenty twenty. 161 00:06:28,160 --> 00:06:30,560 Speaker 2: Price problem that we have today is driven by the 162 00:06:30,600 --> 00:06:33,640 Speaker 2: fact that we do not have adequate firming fuel in 163 00:06:33,680 --> 00:06:35,880 Speaker 2: the market, and that is why the price is what 164 00:06:35,920 --> 00:06:38,440 Speaker 2: it is about thirty to fifty dollars a megawatt. Is 165 00:06:38,480 --> 00:06:41,320 Speaker 2: the risk premium built into the power price today because 166 00:06:41,320 --> 00:06:43,560 Speaker 2: the market does not have certainty that if we have 167 00:06:43,600 --> 00:06:44,840 Speaker 2: a dry year it can be covered. 168 00:06:44,880 --> 00:06:46,920 Speaker 1: Why don't you do what Phraser winner A said, which 169 00:06:46,960 --> 00:06:49,279 Speaker 1: is to take coal out of the etes or at 170 00:06:49,400 --> 00:06:51,240 Speaker 1: least price coal at the same level as gas. 171 00:06:51,560 --> 00:06:53,960 Speaker 2: Look, the reality is is we're going to need gas 172 00:06:54,120 --> 00:06:57,360 Speaker 2: in addition to coal in order to firm our electricity. 173 00:06:57,600 --> 00:06:59,200 Speaker 2: And as I said, that is an area that we 174 00:06:59,240 --> 00:07:00,440 Speaker 2: are proceeding. 175 00:07:00,400 --> 00:07:03,240 Speaker 1: Call at the same level as gas because at least 176 00:07:03,240 --> 00:07:05,080 Speaker 1: it's more affordable then for the country. 177 00:07:04,720 --> 00:07:08,400 Speaker 2: Because we're not in the market around trying to set prices. 178 00:07:08,720 --> 00:07:10,840 Speaker 2: We want to make sure that we've got the appropriate 179 00:07:10,880 --> 00:07:13,840 Speaker 2: amount of fuel to run the generation capacity we have today, 180 00:07:13,880 --> 00:07:15,040 Speaker 2: and that we don't have that at the moment. 181 00:07:15,080 --> 00:07:17,440 Speaker 1: It's your announcement which you have made today going to 182 00:07:17,440 --> 00:07:18,640 Speaker 1: stop the closure of mills. 183 00:07:19,120 --> 00:07:22,360 Speaker 2: It is going to put downward pressure on energy prices, 184 00:07:22,520 --> 00:07:25,000 Speaker 2: and that is one of the major issues businesses want 185 00:07:25,040 --> 00:07:29,040 Speaker 2: from Businesses want certainty and the interventions and actions that 186 00:07:29,040 --> 00:07:32,040 Speaker 2: we've announced today will have an immediate effect on that 187 00:07:32,120 --> 00:07:35,440 Speaker 2: downward pressure price. We've announced a number of those interventions. 188 00:07:35,520 --> 00:07:38,240 Speaker 2: We're releasing the RFI around what the government's going to buy. 189 00:07:38,400 --> 00:07:41,920 Speaker 2: We're going to do the allergy RFI next Monday. The 190 00:07:42,000 --> 00:07:44,960 Speaker 2: signal that I've instructed transpower around some of the relatory 191 00:07:44,960 --> 00:07:48,480 Speaker 2: work has started immediately, and you know, as an eventive, 192 00:07:48,520 --> 00:07:51,600 Speaker 2: as a package of interventions, this is the most significant 193 00:07:51,600 --> 00:07:54,840 Speaker 2: package of interventions that we've seen in decades, and importantly 194 00:07:54,920 --> 00:07:58,000 Speaker 2: it deals with the problem that our energy market faces, 195 00:07:58,040 --> 00:08:01,880 Speaker 2: and that's a lack affirming fuel and generation capacity. 196 00:08:02,000 --> 00:08:04,120 Speaker 1: Simon, thank you for coming in. I appreciate you making 197 00:08:04,120 --> 00:08:06,760 Speaker 1: the effort very very much. Thanks So what's the Energy Ministic? 198 00:08:07,400 --> 00:08:10,560 Speaker 1: For more from Hither Duplessy Allen Drive, listen live to 199 00:08:10,640 --> 00:08:13,679 Speaker 1: News Talks it B from four pm weekdays, or follow 200 00:08:13,720 --> 00:08:15,440 Speaker 1: the podcast on iHeartRadio.