John Hancock: More energy needed on solving problems

The Government is focused on Auckland, but the issue affects the whole country, where energy and infrastructure investment is becoming a higher-profile cause by the week.

So often these industry gatherings can be the converted preaching to the converted, but this winter, what with the discussions between Transpower, other energy companies, the Electricity Commission and now the Government's statements, there is a real opportunity for this summit to hum.

Yes, securing Auckland's future electricity supply is only one issue, and New Zealand is more than just Auckland - but ensuring electricity supplies to the country's largest city and economic hub are operating smoothly must be a priority.

Now Michael Cullen has given notice that the Government will step in if a resolution is not forthcoming.

"The Government does have certain powers in terms of policy statements," he warned.

Helen Clark has added her voice, saying the Government "cannot settle for a solution which doesn't give an adequate guarantee of secure supply".

Things are getting interesting.

Now, enter the plan for a new national energy strategy. We hear that some officials are worrying that a lot more is being loaded into this than was originally planned. And although the draft is due out before the end of the year, the Government has still not announced its terms of reference for the strategy.

What role will this strategy have in resolving some of the issues that have arisen over transmission decisions? And how far will the Government go in intervention in the electricity area?

Finally, the Government's patchwork-quilt approach to infrastructure investment warrants scrutiny.

There are inconsistent approaches to roading, telecommunications and energy infrastructure.

The Telecom decision is hard to reconcile with what the Government seems to be doing with electricity - its move to more central co-ordination by the Electricity Commission of transmission and generation is in the opposite direction to the proposed unbundling of Telecom's local loop.

Telecom has been the single co-ordinator of local loop planning, design and investment. The Government's rationale for unbundling the local loop is to increase investment in broadband, whereas in the electricity industry the commission has said Transpower wants to spend too much despite what many in the industry think.

The issue isn't that any of the approaches to infrastructure investment are wrong, it's just that they appear to be working differently across what are essentially the same infrastructure investment issues.

PricewaterhouseCoopers' infrastructure stocktake highlighted a gap between the level of infrastructure investment over the last 20 years and what will be necessary to ensure capacity balance in the future.

With this varied approach comes a growing (and much needed) awareness of the importance of infrastructure funding and economic growth.

The rebranded growth and innovation framework shows the Government is starting to make the direct link between infrastructure funding and economic growth.

These are hard problems and even when it seems you've fixed them, they don't stay fixed. In the mid-1990s, the New Zealand electricity industry was the international poster girl for electricity deregulation.

Unfortunately, our supply balance looks different today from how it did 15 years ago. We're no different from the rest of the world but we need to do something.

So back to the issues before us:

* Debate over the transmission and the 400Kv line.

* Questions over market structure and whether significant structural changes are needed.

* Regulation and its effects on investment in energy infrastructure, climate change and energy security, and fears (yet again) that there might have been a significant energy crisis this winter.

* The promise (or threat) of a new national energy strategy.

The summit will provide a perfect chance to address these issues and come up with some answers. Participants range from the Government, regulatory bodies, SOEs and Government agencies, to transmission and lines companies, generators/retailers, industry organisations, large energy users, infrastructure companies, legal firms, investment bankers, consultants and analysts and local councils.

It is taking place in Wellington - but you can be sure Auckland will get more than a passing mention.

* John Hancock is head of energy and utilities at HP Business Consulting.

* The Conferenz 8th Annual New Zealand Energy summit starts today in Wellington.