Energy Minister Simon Watts took over the portfolio from Simeon Brown in the late January reshuffle. Photo: RNZ / Samuel Rillstone
The new Energy Minister Simon Watts has met with gentailers to discuss progress and cooperation ahead of the expected winter energy price spike.
RNZ sought answers over how the meeting with the four generator-retailers - Genesis Energy, Mercury, Meridian and Contact - went, but the minister did not respond in time.
Watts on Tuesday announced Frontier Economics would lead the government's market review.
But the final report will not be delivered until the end of June - well into winter, when energy supply and prices will be under more pressure.
"The review... the reality is we are where we are in terms of timeline and we don't want to cut them short in terms of making sure that we've got substantial recommendations that we can work and act upon," Watts told RNZ.
"The tradeoff is that winter's coming - and we don't know as and when that'll be hitting its peak."
Wholesale power prices last winter spiked dramatically, mostly affecting industries. It led multiple wood and paper mill to close, but residents were largely protected because power retailers had purchased future contracts to maintain stable prices. This year, however, the additional risk and likelihood of supply shortages have already been priced in.
That, combined with increased lines charges and the continued phase-out of a fixed daily price scheme, are expected to see power price increases in the double digits.
Watts said the review would be critical to assess what opportunities the government should explore, and he had spoken to Frontier about the need "to leave no stone unturned".
In the meantime, the government would be focused on "short-term considerations, in effect the next 120 to 150 days - which is the period which is going to be challenging".
Asked what the government planned to do in that time, he pointed to the gentailers' announcement of a dry-weather accord which could see the retirement of the Huntly power station delayed.
Associate Energy Minister and NZ First MP Shane Jones previously said the four gentailers were profiteering.
Watts on Wednesday said he was set to meet with them later that day to discuss "where they're at, and their progress".
"We need to work together on the challenge that New Zealand faces around energy security and I'm confident we can do that."
Review expected to cost upwards of $750,000
Frontier Economics is a British-based global consultancy, with Concept Consulting providing support on the New Zealand context and two groups providing peer reviews of the review.
The advisors were selected through an open tender process.
Watts' office on Wednesday confirmed the review would likely cost at least $750,000, paid for through the Ministry of Business, Innovation and Employment's existing baselines.
"MBIE advised in the tender documents that it expects to pay the Lead Reviewer up to about $0.5 million for the work, while the New Zealand expert advisor will receive up to $50,000 and the two peer reviewers will be paid up about $0.2 million combined. We cannot comment on specific commercially sensitive contractual arrangements."
Work on lines companies 'under active consideration'
The government announced its plan to tackle energy shortages in August, saying details about lines companies owning generation would be confirmed in 2024.
Watts said progress was "well underway on the government's investigation into the amount of generation that electricity distribution businesses can invest in, and decisions will be made in due course".
"It's still definitely under active consideration. I've been in the portfolio a couple of weeks but be under no illusion that we're leaving no stone unturned to ensure we've got energy security and affordable energy prices for New Zealanders."
Watts - who is also the Climate Change Minister - was later seen nodding behind Infrastructure Minister Chris Bishop in Parliament as he spoke about the need to grow, and the need to use fossil fuels to do it.
Government 'negligent' on energy security - Labour
Labour's energy spokesperson Megan Woods called for the government to pick up the pace and put in place systems that would deliver cheaper power for New Zealand households and businesses.
"The government has completely dropped the ball when it comes to energy and planning for New Zealand's energy future," she said.
"Having the gentailers work together is one part of the puzzle. But what I'm concerned about is that this is going to be seen as the magic silver bullet that's going to get us through dry winters. This is not enough on its own.
She pointed at scrapping of the New Zealand battery project - which she said was about much more than just Lake Onslow.
Then there was the scrapping of the $20 million distributed flexibility innovation fund which was focused on encouraging use of battery storage in homes and businesses and using smart technology to reduce demand at peak times.
"We know that load shifting actually will benefit households. It will result in lower power bills, it's a win win for everybody."
She said the government should be focusing on long-term planning to get New Zealand through the dry winters, which would become increasingly prevalent due to climate change.
"We're going to have to figure out how we store electricity in the future, but most importantly, that we can do this in a way that is the most affordable.
"I think making sure that we've got the EA (Electricity Authority) that's doing the work around flexible markets to enable this innovation ... that's going to be critical."
"They haven't put anything in place to make sure that they're planning for New Zealand's future. It is negligent on their part, and I want to see this minister move quickly on this, because it is too important to New Zealand's future for them to be playing politics."
The minister meeting with the gentailers was nothing new and something that happened frequently, she said.
"Just doing your job and meeting with the gentailers isn't going to be enough."
She said she would be willing to work with Watts on a bipartisan basis - and had done so in the past on their climate portfolios - but "Labour does have its bottom lines, and we have a government that is only planning for a future that involves fossil fuels and expensive power for New Zealanders - that's not something we could sign up to".
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