The Commerce Committee has examined the Energy Innovation (Electric Vehicles and Other Matters) Amendment Bill and recommends that it be passed with the amendments shown.

This omnibus bill seeks to amend the Electricity Industry Act 2010, the Energy (Fuels, Levies, and References) Act 1989, the Land Transport Act 1998, and the Road User Charges Act 2012.

The bill aims to encourage energy innovation, such as emerging energy technologies and increased variation in energy-related business models, so New Zealand can respond to its environmental and energy objectives.

It proposes to achieve this by:

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  expanding the purposes for which the existing electricity efficiency levy, gas levy, and petroleum or engine fuel monitoring levy can be used to enable the Energy Efficiency and Conservation Authority (EECA) to use all three levies; and improving the operation and administration of the levies

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  encouraging the uptake of electric vehicles by extending the road user charge exemption to include heavy electric vehicles, and clarifying that a road controlling authority may use its bylaw-making powers so that electric vehicles (EVs) can access bus and high-occupancy vehicle lanes

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  clarifying how electricity industry legislation applies to secondary networks (electricity networks that are indirectly connected to the national grid).

This commentary covers the main amendments that we recommend to the bill. It does not cover minor or technical amendments.

The bill would make changes to clarify how electricity industry regulation applies to secondary networks.

Secondary networks are electricity networks that are indirectly connected to the national grid. They include equipment that is used, designed, or intended for use in or in connection with the conveyance of electricity. Examples include networks in some multi-tenanted office blocks, residential apartment blocks, retirement villages, shopping centres, airports, industrial or commercial parks, and residential subdivisions.

Clause 7 of the bill would insert new subpart 2A in Part 5 of the Electricity Industry Act 2010. It would apply certain electricity industry legislation to secondary network providers on the same basis as if they were electricity distributors. New section 131A includes definitions of a secondary network and a secondary network provider.

We understand that the aim is to make it clear that, when owners of secondary networks undertake activities equivalent to those of an electricity distributor, they should be subject to the same regulatory requirements.

We recommend clarifying the definition of “secondary network provider” in clause 7, new section 131A(2). We believe that applying the legislative requirements to services that are “substantially” similar to those of a distributor, rather than just similar, would more closely match the policy intent.

The bill would facilitate the implementation of a new initiative to allow EVs to use special vehicle lanes, if a road controlling authority uses its bylaw-making powers to do so.

We heard concerns relating to enforcing this initiative, because of the difficulty of distinguishing between EVs and non-EVs.

We recommend inserting new clause 17A, amending section 145 of the Land Transport Act, to permit an image taken by approved vehicle surveillance equipment to be evidence of the unauthorised use of a special vehicle lane.

Information about a vehicle can be accessed on the Motor Vehicle Register (MVR) by using its number plate. The MVR is in the process of being updated to show whether or not a vehicle is electric. It also shows who owns the vehicle so that, if necessary, they can be sent an infringement notice.

We consider that our proposed amendment would provide another option to enable road controlling authorities to enforce the correct use of special vehicle lanes.

Clause 20 of the bill would insert new section 37A into the Road User Charges Act to allow heavy EVs to be exempted from road user charges (RUC) for a period of time, by Order in Council. As introduced, this new section uses the same language as the existing RUC exemption for light EVs.

We recommend amending proposed new section 37A by inserting new subsection (1A). This would require the relevant Minister to be satisfied that any Order in Council under this section has the purpose of encouraging and supporting the uptake of heavy EVs.

We also recommend inserting new subsection (2A) to provide that the initial RUC exemption would expire no later than 31 December 2025, and any subsequent exemption would last for no more than 5 years.

These changes would provide greater consistency with the Regulation Review Committee’s approach to exemption powers.

We recommend amending clause 13 to replace, rather than amend, section 23 of the Energy (Fuels, Levies, and References) Act 1989. This change would place liability for the gas levy solely where gas is sold by a retailer (as defined under the Gas Act 1992).

The bill proposes to amend section 14 of the Energy (Fuels, Levies, and References) Act 1989, to allow the levy on piped gas (the gas levy) to fund EECA’s activities.

We were informed that there is significant under-recovery of the gas levy. Currently, the levy is used to recover the costs incurred by regulators for safety, monitoring, and information provision in relation to the gas industry. This includes gas safety and monitoring activities. The inequity of only some firms (and consumers who pay the levy, assuming that it is passed on) bearing the cost of the levy would be exacerbated by the proposed expansion of the levy.

In the supply chain, the liability for the levy currently sits primarily at the wholesale selling point. We understand that the underpayment of the gas levy can be attributed to complexities that have arisen in the industry since the 1989 legislation. These complexities include a lack of clarity about the point of liability, a lack of information about the end use of the gas that is sold to retailers (as well as whether it meets criteria for exemption), and unawareness of levy obligations.

We consider that our proposed amendment to place the liability for the gas levy on retailers (instead of at the wholesale selling point) is the most appropriate option because:

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  it is clear who is liable

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  it increases transparency without undue burden on retailers (most already pay the Gas Industry Company retail levy)

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  the Ministry of Business, Innovation and Employment would be able to access the necessary data to verify levy payments

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  it does not require complete re-structuring of the levy liability.

We will monitor the way in which this levy is implemented to ensure that consumers are not unduly or unfairly charged in a way that does not reflect the actual cost of the levy to the retailer.