Energy Minister Simon Watts cannot say how much cheaper energy prices will be under the Government's electricity market reforms, despite claiming they will create a real "downward pressure" on prices.
Multiple pulp and paper mills have closed since the coalition came to power, citing high energy costs, leading to loud calls for action on electricity prices.
When asked on Q+A how much cheaper power would be next winter under the changes announced by the Government earlier this month, Watts said: "I don't have a number."
He added: "The reality is this issue wasn't created overnight. This has been a decade-long problem that has been building over that period because of a prior lack of good policy decisions being made. It's not going to be solved overnight and solved tomorrow."
When revealing the Government's much-vaunted reforms, intended to help slow price growth for consumers and businesses, Watts said he wanted to "ensure New Zealand has abundant and affordable energy for next winter".
A review found Genesis, Mercury, and Meridian faced constraints in their ability to invest in larger generation projects. (Source: 1News)
But on Q+A, he emphasised that there would be "downwards pressure" on prices instead, adding that the previous government could instead be to blame for high prices.
"Our changes will deal with the underlying problems that are driving up energy prices in this country … they will have downward pressure on those prices," he said.
"It's important to recognise the high prices that we are dealing with are a direct correlation of decisions made in regards to policy by the prior government.
"The oil and gas ban in particular has created a mechanism where now we've got about six years of no action around exploration on gas in this country. And a lot of those businesses that you refer to have reliance on both gas and electricity as well."
Earlier this month, Finance Minister Nicola Willis emphasised the Government was taking action to tackle system gaps that were "keeping prices high for consumers".
Watts also faced questions about why gentailer share prices increased immediately after the Government announced its response to the electricity market review, which notably did not include structural separation — a proposal often suggested by market critics.
The minister refused to comment directly on share price movements, saying the review provided "certainty to the market" and arguing "uncertainty drives volatility".
Watts said he was confident New Zealand was in a better position for energy security in 2026 than in 2024, pointing to the Huntly coal stockpile and work on LNG capacity.
Rate capping without mandate?
Speaking to Q+A, the minister, who also holds the local government portfolio, defended pursuing rate capping powers despite not campaigning on the policy at the 2023 election and it not appearing in coalition agreements with NZ First or ACT.
Former Labour leader Andrew Little’s been provisionally elected the new mayor of Wellington. (Source: 1News)
"It is not appropriate, nor is acceptable, that people are dealing with that degree of rate increases," Watts said of recent local hikes, justifying the potential intevention.
Watts pointed to Upper Hutt's near-40% rate increases over two years as justification for the possible use of hike caps. Interviewer Jack Tame noted Upper Hutt voters had since voted out New Zealand's longest-serving mayor in the recent local elections.
"That's democracy, though, isn't it? That's localism," Tame said.
Watts said the Government was reviewing rate capping models from Australia and believed "there is potentially a better model to ensure that ratepayers see increases in rates that are on a sustainable basis going forward".
"Be very clear, it is not appropriate, nor is acceptable, that people are dealing with that degree of rate increases. That is not sustainable, and we need to make sure that we've got a better model to help people."
He added: "I'm hearing loud and clear feedback from ratepayers is that they need— they accept that rates will increase, but they do not believe that it is fair or reasonable. These are monopoly entities that are seeing that degree of rate increase."
Watts also noted the Government was still considering possible local election reforms, saying he was "pretty disappointed" over problems with candidates and "voting integrity" in some parts of the country in last week's polls.
The Climate Change Minister also defended recently weakening legislated methane reduction targets despite the Climate Change Commission warning the changes would result in "higher emissions and an increased amount of warming than the current target".
He also refused to commit to buying offshore carbon credits despite official advice indicating they will be necessary for New Zealand to meet its 2030 Paris Agreement target, saying Cabinet had not made that decision.
"With five years out, there is significant uncertainty around what is possible and what is coming down the track," Watts said.
For the full interview, watch the video above
Q+A with Jack Tame is made with the support of New Zealand On Air
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