Q&A: Energy Minister Pete Hodgson offers his views

Q. When did you find Project Aqua was over and how much of a blow was it?

A. Sunday night and I was surprised that the decision came so early.

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Q. Crisis? Challenge? A turning point in our energy history? What is it?

A. Challenge and a turning point in our history. It's not a crisis because Aqua was not due until the end of the decade and there is time for other generation investors to move projects forward.

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Q. Does this fretting over electricity happen anywhere else in the world, or does all this make us look like an international backwater?

A. It happens everywhere. In the past few years Japan, Western Australia, Italy, France, some South American countries, California and the eastern seaboard of the United States have all had either much closer calls than New Zealand has had or serious blackouts. In California's case, it's stretched over two years.

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Q. Whose responsibility is it to ensure the lights stay on?

A. The Electricity Commission which was established only six months ago. Until then it was supposedly the collective responsibility of the market.

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Q. Do you have a plan to deal with this "challenge"?

A. Of course. This is an activist Government and I am an activist minister. However, the bigger challenge for me is not finding replacement generation for Aqua but ensuring there is enough gas from about 2015 which is when current known reserves peter out.

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Q. Should we be scared the lights will go out? Or dreading cold showers?

A. No - unless we suffer from another record-breaking sequence of dry in-flows to our lakes.

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Q. What will it add to our power bills?

A. The demise of Aqua will put the price of electricity up from between half a cent and a cent a unit from about 2010. A cent a unit is $80 a year for an average consumer. However, the rising price of gas is pushing up prices now.

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Q. Do we do enough to conserve energy? Why doesn't the Government subsidise solar panels for home owners?

A. In answer to the second question, we do and we will be to an increasing extent. But we have to avoid a boom-bust cycle or low-quality solar water heater companies entering the market. Energy efficiency - which rather than being about turning the lights off is about technology such as a high-efficiency refrigerator - is an important issue and generally New Zealand's energy efficiency is poor.

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Q. What conservation measures are taken in the Hodgson household?

A. We don't take conservation measures to any extremes - we don't have cold showers. But we live in an old house, it was built in 1863, and so we've spent a lot of effort plugging all the draughts, we've insulated and we now use the log-burner for heating.

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Q. Why can't we just start burning coal? Are we hamstrung by Kyoto?

A. We can burn coal and we do in Huntly now, but it's an expensive fuel and it produces a lot of carbon dioxide which means that if Kyoto comes into force it will attract an additional carbon tax. Because coal causes pollution, it should be subject to a polluter-pays levy.

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Q. Doesn't it all tempt you to go nuclear?

A. No. The intractable problem with nuclear energy is its intractable waste.