{"id":470239,"date":"2026-06-10T13:11:11","date_gmt":"2026-06-10T13:11:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/470239\/"},"modified":"2026-06-10T13:11:11","modified_gmt":"2026-06-10T13:11:11","slug":"the-lng-levy-is-dead-but-who-will-pay-remains-a-mystery","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/470239\/","title":{"rendered":"The LNG levy is dead \u2013 but who will pay remains a mystery"},"content":{"rendered":"

The government has scrapped its plan to fund New Zealand\u2019s proposed LNG import terminal via a levy on power bills but gives no specifics on alternative funding sources, writes Henry Oliver in today\u2019s excerpt from The Bulletin.<\/p>\n

To receive The Bulletin in full each weekday,\u00a0sign up here<\/a>.<\/p>\n

The government has scrapped its plan to fund New Zealand\u2019s proposed LNG import terminal via a levy on the electricity sector. Energy minister Simeon Brown announced the shift in a speech to the Auckland Business Chamber,\u00a0telling RNZ<\/a>\u00a0that MBIE and NIFFCO would work with the \u201cgentailers\u201d (power companies that both generate and sell power) on a \u201cfair funding model\u201d.<\/p>\n

While Brown offered no specifics on possible funding sources, he was categorical that it would not be a levy on power bills: \u201cResponsibility for keeping the lights on sits squarely with the electricity sector \u2013 that is the principle guiding our decisions on funding.\u201d<\/p>\n

From \u2018gas tax\u2019 to uncertainty<\/p>\n

The original plan,\u00a0announced in February<\/a>\u00a0by then-energy minister Simon Watts and the prime minister, was for the roughly $1 billion facility to be paid for through a levy of $2\u2013$4\/MWh on power. The opposition quickly labelled this a \u201cgas tax\u201d, warning the cost would flow through to consumers.<\/p>\n

Labour\u2019s energy spokesperson Megan Woods\u00a0told 1News<\/a>\u00a0there was now \u201creal uncertainty\u201d about who would pay, saying the government was \u201crushing into a multi-billion-dollar commitment without explaining how relying on volatile international markets will lower costs for Kiwis, or ultimately how it will be paid for\u201d.<\/p>\n

The government has long framed the terminal as a backstop for a renewables-heavy grid vulnerable to dry years. Brown said the shortfall requiring cover in a dry year is around three terawatt-hours over three months \u2013 a gap that cannot be filled by batteries or a few days of stored water.<\/p>\n

Pros and cons<\/p>\n

Jonathan Milne of Newsroom<\/a>\u00a0reports that last month, in a \u201csurprise reversal\u201d of its previous support for LNG, Meridian Energy told a parliamentary committee that New Zealand does not need to import LNG to cover dry-year supply shortages. \u201cFrom everything we can see, the analysis shows dry-year risk is being managed through the next 10 years,\u201d said Meridian chief executive Mike Roan. \u201cSo when we look at LNG \u2026 it is not necessary from an electricity perspective.\u201d<\/p>\n

Some big industrial power users have welcomed the government\u2019s confirmation of the terminal. Pan Pac Forest Products general manager Roger Jones told Newsroom the announcement would help keep the last major mechanical pulp mill in New Zealand operating. In 2024, wholesale prices hitting $800\/MWh forced Pan Pac to shut its Whirinaki mill for a month and send 140 workers home.<\/p>\n

Major Electricity Users Group chair John Harbord said LNG would introduce a limit on wholesale prices, acting as an effective fifth player in a market long dominated by four gentailers. \u201cI\u2019m not claiming this as a miracle cure,\u201d he said, \u201cbut it does introduce a soft cap on how high wholesale prices go.\u201d<\/p>\n

No escaping the cost<\/p>\n

But, according to Milne, scrapping the levy doesn\u2019t mean consumers escape the billion-dollar cost \u2013 it is simply routed through the gentailers rather than a flat charge. \u201cAlthough the Government may wish to stop the power companies passing the cost through to consumers, any attempt to do so might be seen by global markets as an assault on property rights,\u201d he writes.<\/p>\n

\u201cIt\u2019s also worth remembering that ministers may be quietly happy for the power companies to maintain their profit margins, because the Government is a majority shareholder in Meridian, Genesis and Mercury. Last year the three paid a total $564 million in dividends to the Crown.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"The government has scrapped its plan to fund New Zealand\u2019s proposed LNG import terminal via a levy on…\n","protected":false},"author":2,"featured_media":470240,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[138,43019,11507,111,6042,139,69,14465],"class_list":["post-470239","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-lng","tag-national-party","tag-new-zealand","tag-newsletter","tag-newzealand","tag-nz","tag-the-bulletin"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/470239","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=470239"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/470239\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/470240"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=470239"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=470239"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=470239"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}