Good afternoon. I am here on behalf of Hon Gerry Brownlee, who sends his apologies that he can't be with you today.

The seven and a half months that have passed since the government announced a Ministerial Review of the Electricity Market has been extremely busy and has involved a great deal of work by all players, industry and government alike.

The government is very pleased with the level of response to the discussion paper issued - 130 in all - many of which were substantial documents that reflected a high level of interest and professional concern about the major issues facing the electricity industry today.   

Following receipt of these submissions in mid-September and substantial analysis of the views contained in the submissions, a detailed Cabinet paper was prepared setting out for Ministers the way forward.

Unfortunately, as always seems to be the case, the timing of the Cabinet process does not quite fit in with Ministers' speech opportunities!

The paper is currently making its way through the Cabinet process, and public announcements are still some weeks away.

I am therefore limited in what I can say to you, and will need to confine myself to some fairly high-level general comments.

As you will be aware, the primary goal of the review is to tackle the steep price increases in consumers' power bills over the past ten years and to look at ways to reduce vulnerability in dry years.

The discussion document set out 29 draft recommendations across a wide range of topics, all of which are intended to contribute to in one way or another to the primary goal of the review.

As the Minister noted when he released the discussion document, the government does find many of the recommendations appealing, and from the responses received it is clear that many of them struck a chord with most of the submitters.

The Minister addressed Nelson Grey Power members a few weeks ago, and made it clear that no government can stand up and say that it will reduce the cost of electricity for consumers.

I agree with him.

What we can do, however, is to give a pledge that we will take whatever steps are practicable to flatten out the extraordinary trend of rising prices that has been a feature of the industry for past ten years - 72 percent, while the cost of living has increased by around one third.

I am confident that we can achieve this.

We've noticed that since we started this review there has been evidence of changes in the behaviour of some power companies, and there are instances, for example, where consumers can get a flat price for up to three years from a particular supplier.

One of the things that we all have to take more time to understand is the range of tariff structure offered by the power companies so that we know exactly what we are buying at different times of the day.

The roll-out of smart meters should assist with this, and I know that the Minister is expecting a report from the Electricity Commission by Christmas on any issues identified to date with smart meters and ways of resolving such issues.

The government is enthusiastic about the potential benefits of smart meters, but the power companies will need to do whatever is necessary to take their consumers with them as they embark on these projects.

Some people are naturally suspicious of the introduction of new technology, particularly when it affects their costs, and they will want to continue to be able to read the register of their new meter if they so wish.

I have heard very positive comments about the way in which the revamped Consumer New Zealand "Power switch" website has helped people work out whether they are on the correct tariff for their particular pattern of electricity use.

I encourage all power consumers to regularly use this facility.

If they do not have a PC, they should consider periodically enlisting the help of someone who does, as the website is extremely "user-friendly" and very quick to access.

They should also remember that they have the right to talk to their power company at any time via the 0800 phone number, and as often as necessary, to check any concerns about the correct tariff.

They must not let themselves be overawed by this process.

I believe New Zealanders should have the ability to exercise choice regarding which company supplies them.

At present the amount of time it takes to switch is seen as a deterrent.

The current average time to switch retailers is 10 calendar days, but this must come down.

I have suggested that the industry support an 0800 number so that consumers could, if they wish, talk to an impartial "one-stop shop" to determine if there were benefits in switching companies.        

I also want the companies to advertise their tariff options regularly and in a "user-friendly" manner - in much the same way, for instance, as the large home appliance, furniture and motor vehicle businesses already compete vigorously for customers.

Let me now comment briefly on a few of the issues touched on in your submission to the review.

On the question of security of supply, submissions were near unanimous in support of abolishing the reserve energy scheme and selling the Whirinaki reserve energy station within New Zealand.

The government is likely to concur with this view.  

There was a wide range of views on the suggestion of compensation payments to consumers during conservation campaigns, with strong support from groups and some generator-retailers.

Other submitters were concerned about the risk of pushing up the prices of hedges and therefore retail tariffs, and increasing risks for new retailers.

This is a somewhat complex question, but the government is likely to agree that some form of compensation for consumers is desirable.

There was wide support for the recommendation that State Owned Enterprises, and potentially all generators, should disclose their risk positions and other relevant information in the same way as private sector companies listed on the Stock Exchange.

Again, this is likely to receive government support.

Oversight of Transpower's grid upgrade plans will continue, probably by the Commerce Commission as part of its role in regulating Transpower's revenues.

I have noted that your organisation does not support the concept of an asset swap between SOE generators.

Instead, you are in favour of the concept of mandatory hedge offerings by generators.

I have also noted your preference for Financial Transmission Rights, and I believe that this issue will be resolved within 12 months from the establishment of the Electricity Market Authority.

As would be expected, you support the entry of lines businesses into retailing, but consider that the provisions do not go far enough.

We need to bear in mind, however, that there was considerable opposition among some submitters to this proposition, with concerns about the potential for discrimination against competing retailers in a number of ways.

Concerns have also been expressed about the potential for trusts to offer rebates only to customers of a retail business that they own, giving that retailer an unfair advantage over competitors.

The government believes that we can arrive at an acceptable compromise between these competing views.

I was also pleased to note your support for a number of other proposals, including guidelines and standards for smart meters, improvement in retail tariff offerings, the establishment of the proposed Electricity Market Authority and a Security and Reliability Council.

Finally, and on a different tack, I would like to touch on our Energy Spot television campaign, which we launched at the beginning of October.      

It covers a range of topics of interest to households and businesses, from insulating houses to efficient driving choices, renewable energy options, building designs, and more.

New Zealand households spend about 3.5 billion dollars on energy each year, and for businesses, the figure is close to $13.5 billion a year.

There are therefore massive savings to be made from using our energy more efficiently.

Research by the Energy Efficiency and Conservation Authority shows many New Zealanders are keen to reduce their energy usage, but are unsure how to do so.

This new campaign is giving large numbers of people clear, practical information to help them make the most of the energy they use both at home and at work.

As well as saving money, using our energy more wisely improves the health and comfort of our homes, makes for more competitive businesses, protects our environment and reduces our carbon emissions.

For example, if just one in every ten households avoided leaving appliances on standby, the country would save over $10 million - or enough electricity to run over 5,000 homes.

Thanks to the success of the insulation campaign that's now been underway for some time, more New Zealanders are conscious of the benefits they can get from energy efficiency in terms of their health and comfort, and also by cutting energy wastage.

EECA estimates that each household can easily save 10 per cent on their electricity bills by taking a few simple steps.

That works out to savings of about $200 per household, or $320 million in savings each year across the whole country.

Reducing our electricity generation by 10 percent equates to a reduction of 760,000 tonnes of greenhouse gas emissions every year.

Assuming a future carbon charge of $25 per tonne, this is worth $19 million to the economy.

An average household spends over $2,000 each year on transport fuel.

By using a few simple driving and maintenance tips, people can reduce this by about 20 percent.

Reducing our consumption of transport fuels by just 10 percent equates to a reduction of almost 1.5 million tonnes greenhouse gas emissions per year, worth $37 million to the economy.

Most businesses can save between 10 and 20 percent of their energy costs.

Across all businesses, that adds up to between $1.35 billion and $2.7 billion every year that could be going to the bottom line.

So I encourage you all, at every opportunity that arises, to persuade people to support our efforts to conserve energy.