Who Benefits is a year-long Newsroom project examining lobbying and influence.
Our current investigation – Power Play – into the electricity industry’s influence will show over the next five days:
- The electricity industry helped formulate the National Party’s Electrify NZ policy
- Lobbying of government officials through a gentailer-heavy industry group, began just days after the National-led coalition Government was formed
- The industry worked on policy proposals with officials for months before other parties, including Māori/iwi, were invited to targeted consultation
- Initially, ministers ordered officials to work specifically with the energy sector
- Central and local government officials pushed back
- Under direction from ministers, policy changes made were strongly directive and enabling of renewable power stations, including re-consenting, but the industry didn’t get everything it asked for
- And Who Benefits? Faster, easier consents for power stations give greater certainty to generator-retailer companies but they’re under no compulsion to build them until demand increases and they stack up financially
- A steep drop-off in investments by majority government-owned electricity companies led to huge dividend payouts being dished out to the state and private shareholders
- Those high dividend levels have continued as power prices rise to levels not seen since before the Bradford reforms in the 1990s
In late 2023, days after the coalition Government was formed, the electricity industry sparked into action.
The influential Electricity Sector Environment Group took the lead, meeting with the business ministry’s general manager of resource markets Bruce Parkes. (Parkes began his career at the Electricity Corporation in 1986, and, after leaving the ministry, now sits on the board of grid operator Transpower.)
An unsigned email from the group was sent to Parkes on December 1, 2023, thanking him for meeting its members – comprising the NZX-listed generator-retailer companies Contact, Genesis, Mercury, and Meridian, (the latter three 51 percent government-owned), and the Wind Energy Association
The industry had briefed business ministry officials on “priority concerns” that “need to be addressed” within an amended national policy statement (NPS) for renewable electricity generation. The reforms should meet the Government’s “clearly signalled policy direction to electrify New Zealand”, the email said.
This was a nod to the National Party’s Electrify NZ announcement earlier in the year, covered in our second Who Benefits piece.
Such policies don’t land out of the blue. Earlier this year, we asked Simon Watts, when he was energy minister, what part, if any, the industry had in formulating Electrify NZ.
He tells Newsroom: “While I was not the National Party’s spokesperson during the last election, I am aware that my colleagues did speak to many people in the industry to inform the drafting of the Electrify NZ policy.”
It’s fair to assume well-resourced and strategic industries work with governments and opposition parties before elections – such as this November’s general election. Later, after a coalition is formed, they’ll lobby officials along the lines of the Government’s policies – the very policies they helped create.
This is the case for Electrify NZ, not that the public knew it.
(Critics like Earl Bardsley, the hydrologist who suggested a pumped hydro scheme at Otago’s Lake Onslow, say the gentailers’ fingerprints are all over the Electrify NZ policy document. It states National’s opposition to Onslow – which, the document said, put the country’s climate change targets “at risk” – and the party’s support for the wholesale market continuing as it is.)
The Electricity Sector Environment Group’s (ESEG) email to Parkes, in December 2023, touches on, among other things, resolving conflicts within the law covering renewable electricity generation (REG) infrastructure and environmental considerations.
“Simply put, there must be a nationally consistent and coherent consenting pathway [original emphasis] across all national direction that enables new and renewed REG projects to be approved, despite any conflict with policies directed at the protection of landscape or biodiversity values and resources,” the email said.
If suggested changes weren’t made, the industry warned, it could dilute attempts to fix infrastructure consenting and planning problems, and the country’s greenhouse gas emission goals “would almost certainly become unachievable”.
There were also offers of help.
The group had “substantial experience” in dealing with officials through Resource Management Act (RMA) reforms under the previous Labour government, the email said. “We can, at pace, assist as required in terms of specific drafting addressing the key priorities …”
Understanding one of the industry’s main policy demands is a bit technical.
In part two of the RMA, section 7 says consent decision makers should “have particular regard” for a number of matters, including “the benefits to be derived from the use and development of renewable energy”.
But, when it comes to building new power stations, the industry complained its projects would often get trumped by “matters of national importance” – such as outstanding natural landscapes and significant indigenous vegetation – listed in the RMA’s section 6.
The ESEG letter said inserting “nationally important infrastructure” into section 6 was “essential” to put renewable energy on an even footing. It warned the failure to do this would make fixes for infrastructure consenting and planning problems “weak and ineffective”.
Consent renewals for existing power stations was another target, with the industry asking for an absolute: “There should be no risk that consent will not be granted.”
A “one-stop shop” was needed, the group said, to overrule “competing national and local interests” such as landscape and biodiversity protections. Avoiding adverse effects was “simply not possible” for developments of the scale and type required to “support electrification and decarbonisation” – the very goals of Electrify NZ.
(This framing is convenient for companies in the business of building large power plants but overlooks alternatives, such as distributed energy projects, like rooftop solar and batteries.)
In that nascent period of the coalition Government, as officials grappled with how best to implement the Electrify NZ policy, the industry’s priorities quickly flowed from meetings with bureaucrats to official advice.
On December 15, 2023, two weeks after the email to Parkes, officials produced their first ministerial briefing.
The Ministry for Business, Innovation and Employment (MBIE), Ministry for the Environment, and Department of Conservation sketched an outline of the work ahead for a bevy of ministers – the National Party’s Chris Bishop (RMA reform), Simeon Brown (energy), Tama Potaka (conservation), and Penny Simmonds (environment), as well as New Zealand First’s Shane Jones, the associate energy minister.
Earlier in 2023, under a Labour government, the public was consulted on proposed changes to national policy statements for REG and electricity transmission (ET). Changes weren’t made but, officials told minister, they might have gone some way to addressing the Government’s priorities. However, to be effective they needed to be “more directive”.
How so?
“The elevation of renewable energy and climate change from section 7 to section 6 of the RMA could also have a significant impact in creating a more enabling environment for REG and ET, and we are seeking your direction to include this in the legislative programme.”
(Another promise made by National in its Electrify NZ announcement was requiring decisions on consents for offshore renewables within two years, but officials recommended a new regime “should progress on a longer timeframe”. New legislation was finally passed last month – after the exit of three developers.)
New power stations would have environmental impacts, the ministerial briefing said. “The challenge is to strike the right balance when making trade-offs between environmental protection and enabling more renewable generation.”
Officials were already listening to ministers.
“You have signalled the need to be strongly directive about enabling renewable electricity generation and restoring the ability to ‘remedy’ and ‘mitigate’ adverse effects on the environment.”
A permanent fast-track regime and “strong” national policy statements would make a “tangible” difference to consenting, the briefing said.
New policy statements could be delivered in the first half of 2024, officials said, while changes to the RMA would follow in the new year.
The industry’s lobbying becomes clearer in 2024, borrowing language from the Electrify NZ policy to bolster its case.
In late January – six months before targeted consultation begins – electricity industry representatives meet online with officials.
Who Benefits is a project tracking and disclosing lobbying and influence. If you know where influence is being brought to bear, email us in confidence at: trublenzOIA@protonmail.com
The power of the farm lobby
Part 1 A deep dive into proposed changes to freshwater policy
Part 2 Is a former farm lobbyist driving freshwater policy valuable expertise, democracy at work or a compromise to the public interest?
Environmental Defence Society
Part 1 examines a change of fortunes for one of the country’s most successful advocacy groups
Part 2 asks how a small team led for decades by one man has achieved outsized influence
Free Speech Union
Part 1 The rise and rise of the Free Speech Union
Part 2 A lobby group’s charm offensive and a doubting Thomas
Part 3 Seymour steps in and directs officials to consult
New Zealand’s gambling market
How monopoly money bought NZ’s gambling scene
Power Play: The influence of the electricity industry
Part 1 How energy-rich NZ became so expensive for electricity
Part 2 A new hope for renewable electricity
Then, on February 2 – roughly a fortnight before the next batch of ministerial advice is due – Humphrey Tapper, Meridian’s Christchurch-based associate general counsel, sends officials an email “from the ESEG members”.
The group provides specific draft wording for the national policy statement. Tapper writes: “We consider this wording includes, substantively, all of the key elements of the objective and policy framework as we submitted last year, but in a more concise (less repetitive) way.”
A strongly directive and enabling policy would, the Meridian lawyer says, be “required to prevail over (or at least match/counter) the content of other national direction”. A “specific code” would allow decision-makers to resolve conflicts between renewable energy projects in areas with significant environmental values.
“Taken together, the instrument would then be sufficiently armed or equipped to deliver on the Government’s Electrify NZ ambition to ‘turbo charge’ new renewable power projects (within nationally consistent rules).”
Previous drafts ‘don’t go far enough’
On February 15, ministers Simeon Brown, Chris Bishop and Penny Simmonds receive official advice on “implementation of the Electrify NZ work programme”.
One briefing says the national policy statements are “quite weakly worded and developments in case law have made them less effective over time”, and the national direction lacks “coherency”.
Electricity sector representatives “do not believe that the previous [NPS] drafts go far enough …”, the briefing says.
The influence of the industry is obvious.
Changes to sections 6 and 7 of the RMA – as suggested by the industry – “will also be relevant”. Progressing the national policy statement without changing section 6 “may jeopardise the delivery of the Electrify NZ outcomes”, the briefing says, reflecting the industry’s characterisation from December the previous year.
A “strongly directive” statement creating a “one-stop shop” – resolving the conflict between building power stations and significant environmental values – was “the preferred approach of the electricity industry”.
Another briefing paper explicitly states Electrify NZ must be consistent with the principles of the Treaty of Waitangi – including acting in “partnership and good faith”, and active protection of freshwater, which is a taonga (treasure).
There hasn’t been enough time for officials to consider the policy’s effect on Māori rights and interests, but engaging with iwi/Māori is a “key opportunity”.
“Engagement with iwi, hapū, and Māori will need to be meaningful, early and coordinated across agencies to ensure that rights and interests are provided for throughout the development of policy.”
“Appropriate consultation” will lower the risk of a judicial review, it’s noted.
The briefing highlights two primary concerns.
“The first is uncertainty over the implications of the proposed policy on Treaty settlements, redress, rights and interests, and previous commitments made by the Crown in respect of Māori rights and interests in freshwater and geothermal. The second concern is the legal and reputational risks concerning timely and sufficient engagement with Māori.”
‘In time it [the generation market] will begin to focus on supporting economic growth by attracting global companies seeking renewable electricity.’
Mike Roan, Meridian Energy chief executive
Bishop, Brown and Simmonds meet officials on February 28, 2024. (Ministerial diaries noted a half-hour meeting at the Beehive from 8pm.)
Officials state their preference to consult “the energy industry, iwi/Māori, local government, environmental NGOs and other relevant stakeholders” but ministers disagree.
Notes taken by Liz Moncrieff, the environment ministry’s general manager of urban and infrastructure policy, say: “Okay to test work with energy sector, but not agreeing yet to wider engagement.”
Skipping ahead a little, on April 23, the Ministry for the Environment gives RMA Reform Minister Bishop advice ahead of a paper to be lodged with Cabinet’s economic policy committee by Energy Minister Brown.
The aide-memoire suggests the paper be changed to “outline a commitment to a comprehensive process of engagement with Māori, particularly in those areas of greatest interest to Māori”. Freshwater rights and interests, particularly relating to hydro electricity, and “possibly geothermal”, are noted as areas of interest.
(Māori rights and interests in freshwater is a big, thorny issue which successive governments haven’t successfully grappled with. In 2020, Ngāi Tahu launched a High Court claim against the Crown over freshwater – and the case was heard last year.)
Edward Ellison, a prominent Ngāi Tahu Upoko (leader) from Dunedin’s Te Rūnanga o Ōtākou, tells Newsroom: “This does not reflect the Crown acting as one would expect in terms of being an honourable Treaty partner.
“The initial draft wording [of the NPS] appears to have reflected the interests of specific stakeholder groups, noting your inquiries reveal the degree with which the electricity industry interests had been briefing and influencing ministries/ministers from the get-go.”
Back to the interplay in Wellington.
Ministers tell officials that renewable electricity generation needs greater recognition in resource management laws.
“Essentially, they strongly doubled down on the need to enable as much REG activity was possible,” Moncrieff writes in her minutes from the February meeting. “This Government is relying heavily on this policy work to help meet its climate goals (ie, presumption is that REG will be granted).”
The ministers’ comments gel with the greater certainty the industry was asking for.
They also align with Luxon’s comments, as National Party leader in March 2023, that Electrify NZ will “put New Zealand on track to reach its climate change goals”.
But, critics ask, at what cost? As you’ll recall from part two, Forest & Bird’s Richard Capie says: “You don’t try and solve a climate crisis and, say, a national security energy crisis, by exacerbating a biodiversity crisis.”
Industry brings in specialist lawyer
Environment ministry officials hold a three-hour workshop with the industry’s Electricity Sector Environment Group on March 26, 2024.
As a sign of the resources it is willing to commit, the group is accompanied by Napier barrister Martin Williams, a former president of the Resource Management Law Association, who talks about inserting an infrastructure provision into section 6 of the RMA.
(Williams tells Newsroom: “I have assisted the Electricity Sector Environment Group in developing its response to the current RMA reform context, to ensure the new RMA system effectively provides for new and enhanced REG investment.”)
“There is nothing enabling in section 6,” Williams says, according to the workshop’s notes. “It’s all protective provisions.”
The national direction won’t be enabling, he says, if renewable electricity isn’t in section 6.
Manawa Energy’s representative says many projects get “killed off” at the feasibility stage because of section 6’s protections and policies in regional and district plans can “undermine” renewable energy.
There is pushback from an environment ministry official, whose name is redacted, who says section 6 doesn’t give primacy to protection, and asks the industry to be more specific about the changes it wants “on the ground”.
“How much do we want to give priority to REG over other values? When should renewables take precedence?”
Harking back to 2023, more general changes to the resource management system were part of the National Party’s 2023 Electrify NZ policy – requiring consent decisions to be made in a year, defaulting to 35-year consents instead of 10 years, and 10-year lapse periods (how long companies have to start projects before the consent expires).
At the March 2024 workshop, Kevin Hart of the Wind Energy Association says it takes four years for wind turbines to be received after an order is placed, and then two-to-three years to build. But global supply chains are tight, Hart says, which can push out construction times.
“It is crucial that lapse periods be adaptable to these constraints.”
Representatives of Genesis, Contact, Manawa Energy and grid operator Transpower say 10 years may not be enough. Contact says it had two large wind farms approved in the mid 2010s, convincing the judge to grant consents for 10 years, “but now they only have five years to build it”. Genesis, meanwhile, had just applied for an extension for its Castle Hill wind farm, near Masterton.
The Government’s plan to mandate consent decisions be made within a year isn’t wholeheartedly embraced. An unattributed comment from the workshop says sensible timeframes are important “but less so than the outcomes”. That is, getting approval.
Here’s an inherent tension within Electrify NZ.
On one hand, the National Party promised (and the Government embraced) the policy would “drive a surge of investment in renewable electricity generation”. Yet, the industry explicitly states a preference for approvals, and long lapse periods for consents.
Policy-makers can’t compel a new power station be built once it’s consented.
(This is problematic when the country is increasingly off-track in reducing climate polluting emissions, and the Government is relying on new renewable power stations to do some of the heavy lifting.)
Geoff Bertram, a visiting scholar at Victoria University of Wellington’s School of History, Philosophy, Political Science and International Relations, says the big companies have a history of sitting on consents.
He points to TrustPower’s proposed development on the Waiau River, Meridian’s plan for the north bank of the Waitaki River, and Genesis’s proposed Castle Hill wind farm.
“They would like to be able to get consents tomorrow and then hold them for 30 years,” Bertram says. “There’s a consistent pattern of these guys nailing down the sites; locking them up.”
Mike Roan, chief executive of Meridian, notes that in other countries (or “energy systems”, as he calls them) investment in renewables is dependent on government subsidies, tax breaks, or other incentives. In New Zealand, it’s driven “purely by the economics of each investment”.
Over the past 15 years, more than $10 billion has been invested in “mostly” renewable generation, “in the absence of any demand growth and in the absence of any government incentive”.
“Meridian does not sit on issued consents, and it doesn’t make any sense for any party to do if the consent supports a project that is economic. If you don’t execute economic projects, you cannot create value and you may lose the opportunity to grow to a competitor who will execute its projects.”
(This explanation overlooks Bertram’s point that companies secure consents to deny the opportunity to competitors, and a rapid drop-off in investment after the sharemarket floats of Meridian, Genesis and Mercury in 2013 and 2014.)
Right now, Roan says the industry is increasing electricity supply “to meet future demand and bring prices down”. “In time it [the generation market] will begin to focus on supporting economic growth by attracting global companies seeking renewable electricity.”
Renewable developments committed to or being actively pursued will add 25 percent capacity to New Zealand’s electricity generation system. Roan points to a statement by the Electricity Authority, which says: “Neither the current rate of build nor the observed pipeline of investment (including the significant portion from non-incumbents) is consistent with any gentailers profitably delaying investment.”
(Our next Who Benefits piece covers a Department of Conservation analysis of whether the coastal policy statement is a barrier to renewable power stations being built.)
Bishop invites industry views, as officials express reservations
It’s unclear whether the industry’s tactics changed in early 2024, or whether it always had a two-pronged strategy, but around the time of the aforementioned workshop in March, RMA Reform Minister Bishop sends the electricity industry a letter.
Bishop invites “views and suggestions on targeted amendments to the RMA that are practicable”, that would have a “real impact in the short term”, to deliver Electrify NZ.
It’s fair to assume Bishop’s invitation didn’t appear out of the blue. However, it doesn’t coincide with a direct meeting with one of the electricity companies, according to Bishop’s diary.
(The minister attended an infrastructure conference on March 26, and a breakfast meeting the next day hosted by Hugo Group, whose members include Contact, Genesis, Meridian and Mercury.)
The Electricity Sector Environment Group leaps at Bishop’s invitation.
Its April 5, 2024 response, peppered with the usual acronyms and planning language used by bureaucrats, complains about reservations “seemingly prevalent within the officials”.
Officials reckoned a new national policy statement couldn’t direct that new projects (or re-consented ones) must be approved when matters of national importance were at stake, the letter says – “even where all adverse effects are avoided, remedied, mitigated or offset, and there are no alternative sites … ”.
Helpfully, the group provides the suggested wording to be inserted into the RMA.
Another ESEG complaint is a line from officials that it would be unlawful for one national policy statement to prevail over another. The industry group suggests amending another section of the RMA (s45A, for the record) to specifically “overcome this concern”.
The letter concludes: “Should it assist, additional evidence to support the case for these amendments (including any future regulatory impact statements regarding the same) can be supplied, ESEG respectfully suggests through further engagement with the ministry officials involved in this specific reform programme.”
Let’s take stock.
Targeted engagement hasn’t even started and the industry has been meeting with officials, and its priorities are added to ministerial advice. That’s lobbying at work. But where does the public interest sit?
We’ll tackle that in our next piece, when officials strike back.
