Advocacy Report Reader

Levi Gibbs

Published: July 28, 2023

Submitting To: Electricity Authority

Issue for Business: The EA has assessed the risk of an disorderly exit of thermal electricity generation. The Authority considers the risks to be low. Based on their assessment with modelling done by Concept Consulting, thermal generators experience net-cash flow volatility, depending on the type of generator. But overall they remain positive. They believe current market settings provide sufficient signals to existing thermal to remain in the system. This submission outlines BEC's response to several issues and matters raised. Among the several considerations mentioned in the submission, below are a few: 1. BEC believes this assessment should be ongoing because is the risk is ongoing. 2. BEC recommends that the Authority's analysis should be broadened to encompass a more comprehensive, contestable and open assessment. 3. We agree, in theory, a decrease in demand may not necessarily lead to a disorderly phase-out of thermal generation. However, at present, market participants express their deep concern about the lack of incentives and returns to justify the investment into a fast start peaking plant. This is concerning. 4. Gas supply in the broader conversation about sufficient thermal capacity must be considered adequately. 5. Existing policy uncertainty, including proposals like the NZ Battery Project and the 100% renewable electricity target, is severely damaging the investment feasibility of building new peaking plant. Abandoning the proposal would restore much needed certainty and investor confidence.

Levi Gibbs

Published: July 19, 2023

Submitting To: Commerce Commission

Issue for Business: The Commission's draft decision largely retains the current methodology. This may not be prudent considering the evolving needs of electrification. There are instances where the Commission proposes changes that are retrograde steps, such as reductions to the weighted average cost of capital (WACC) percentiles for EDBs, which seem questionable given the need for investment in decarbonisation and the transition away from being less dependent on thermal generation. The WACC impacts financiability by acting as a building block for the rate of regulated return – the return that a regulated network can earn on investments. Implementing a steady state or incremental approach, in this context, could possibly slow electrification, and thus jeopardise the country’s energy transition. Insufficient allowances for network companies would likely result in a slower and impeded transition, making it more challenging for the country to meet its international commitments to achieve net-zero emissions within the designated timeframe.

Levi Gibbs

Published: June 1, 2023

Submitting To: Ministry of Business, Innovation and Employment (MBIE)

Issue for Business: The Government has announced two new National Policy Statements on the national direction for renewable electricity and transmission. The Problem: the existing statements have failed to provide national direction, due to weaker or missing language. This ineffectiveness is compounded by stronger policy statements in competing areas, like NPS-FM or NPS-HPL. National direction and additional emphasis on nation significance must be provided to reduce consenting uncertainty, and provide decision-makers more weight to consider and grant consent for new renewable electricity and transmission infrastructure. BEC is pleased that the Government understands, and acknowledges, the increasing need to build this infrastructure to help meet New Zealand's climate targets. In some places, the NPS is an improvement. In others, it is a step-backwards. BEC outlines several problems with the proposed statements. This submission outlines several problems with the statements wording that must be addressed if New Zealand is to have an effective NPS-REG & ET. However, fundamentally, BEC notes that an NPS is limited in its ability to speed up and reduce the cost of NZ's costly and cumbersome consenting process. The RMA itself must be reformed. BEC refers to BusinessNZ's submission outlining the problems with the RMA's replacements - SPB and NBE, and how they can be improved.

Levi Gibbs

Published: May 11, 2023

Submitting To: Ministry of Transport (MoT)

Issue for Business: The paper outlines a system-wide vision and five proposed long-term outcomes to support the rollout of charging infrastructure in New Zealand. In response to the paper, BEC outlines some of the barriers and challenges public charger providers and electricity distribution businesses (EDBs) face, and are likely to face, as the uptake of electric vehicles accelerates. BEC supports a strategy for EV charging infrastructure. BEC recommends removing or alleviating these barriers should be the focus of the strategy, enabling businesses and investors to roll-out EV charging infrastructure without large regulatory, process and cost constraints standing in the way. BEC believes this interagency group should partner with the private sector by identifying problems and barriers, and doesn't prefer other options tabled, like the formation of a new agency and entity. BEC believes the heavy lifting will be provided by market players, and the Government has limited role in public EV charging provision in the early stages if market failures arise. But any analysis of determining a market failure must be rigorous, and rightly identify areas where chargers are needed. BEC questions the need for targets, considering the relatively arbitrary nature of targets and wider regulatory interventions, like compulsory EV charging in new builds. BEC recommends application processes can be streamlined across NZ's 29 EDBs. The processes vary in time and cost. BEC's submission outlines the cost of connecting a charger to the grid, which can vary, but is a large barrier. A new connection can substantial increase the cost of connecting, and weaken the commerciality of installing an public EV charger. However, EDBs need the revenue to fund their increase in capital expenditure. Undoubtedly, the issue of reducing reducing cost inevitably turns to who pays?

Levi Gibbs

Published: April 14, 2023

Submitting To: Ministry of Business, Innovation and Employment (MBIE)

Issue for Business: Under the Government's ERP, they have promised to create a regulatory regime for the feasibility, construction, operation and decommissioning of offshore renewable energy by 2024. MBIE's discussion document outlines how the regime could work and raised questions on how it should work. BEC supports, and applauds, the Government's commitment to creating this regime, and has provided feedback to MBIE's questions: 1.) BEC supports a developer-led approach, not a government-led approach. 2.) BEC supports a permitting regime that creates exclusive rights to undertake feasibility studies, and the exclusive right to apply for construction and operation once the feasibility has concluded. 3.) BEC supports a 'use-it-or-lose-it' provision and recommend periodic reports demonstrating how activities are progressing to safeguard against 'land banking.' 4.) BEC recommends resolving the issue of overlapping permit applications by implementing a merit-based assessment and a negotiation mechanism. 5.) BEC recommends a permit duration of ten years. 6.) BEC questions the need for a national interest test. A test will already occur with the Overseas Investment Office (OIO) approval of overseas funds. 7.) BEC supports the involvement of iwi, hapū and whanau, but believes any requirements should not be onerous and overly prescriptive. 8.) BEC recommends a broad technical criterion, and a narrow financial criterion, to ensure developers are suitable, competent and capable, without 'locking-out' a diversity of developers and worsening competition. 9.) BEC believes that the final decision on granting permits should be made by a relevant decision maker, not the Minister.