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After Aqua - Let lines companies back into energy

Electricity Networks Association
Media Release – Immediate release – 29 March 2004

After Aqua - Let lines companies back into energy

With Aqua gone, all restrictions on lines company investment in generation and retailing should go says the Electricity Networks Association.

The Electricity and Gas Industries Bill, currently before a Select Committee, would allow a lines company to generate the greater of 25 MW or 10% of the maximum demand on its lines.

“The Bill gives an opportunity to bring the one major group of industry participants which has the necessary experience and resources to make a difference, back into generation and retailing,” says ENA Chairman Warren Moyes.

“Before they were forced out of the energy business by legislation in 1998-99, lines companies were emerging as the major investors in power supply” he says.

“Lines companies commissioned an impressive range of efficient, clean new plant in the late 1990s, totalling over 620 MW”.

Mr Moyes said that with electricity demand growing at 150 MW a year, there had already ample evidence of the need for major reinvestment in generation.

“The demise of Aqua only adds to the urgency.

Mr Moyes says past concerns that lines companies could cross subsidise their businesses were no longer valid.

“The Commerce Commission has placed stringent regulatory controls on lines charges. This means any chance of subsidising poor commercial generation ventures from captive lines customers is now non-existent”.

“Maintaining restrictions on lines companies again becoming major players in generation and energy trading defies logic.

“The lines industry has the potential to make a major contribution in meeting tomorrow’s power needs. The country’s 27 lines companies are valued at between $4.5 book value to $7 billion market value. They have the capacity to invest up to $2 billion.

“As was shown in the past, it was largely the lines industry that had the vision to invest at the right time while state-owned entities kept their eyes on a much more immediate commercial horizon”.

Ends

For further information, contact Warren Moyes on (09) 433-5707

Electricity Networks Association; 7th Floor, Computerland House, 154 Featherston Street
PO Box 1017 Wellington, New Zealand. Telephone: 64-4-471 1335 Fax: 64-4-496 5209
E-mail adj@electricity.org.nz

Chart attached – P2


Lines Company Generation Projects Prior to Line/Energy Split

Plant and Capacity and Approx. Developer Commissioning Date
Major Gas-Fired Plant
« Southdown Co-generation, Mercury (VECTOR) 120 MW, 1996
« Stratford (33% VECTOR) 376 MW, 1998

Landfill Methane
« Rosedale, VECTOR 8 MW, 1996
« Silverstream, EnergyDirect (VECTOR) 3 MW, 1997

Geothermal
« McLachlan, VECTOR 40 MW,1997 (Formerly Poihipi)
« Rotokawa, Power NZ (VECTOR) 18 MW, 1997
« Ngawha, Top Energy & Iwi 10 MW, 1998

Wind
« Haunui, Wairarapa (Powerco) 7 MW, 1997
« Tararua, Central Power (Powerco) 32 MW, 1999

Small Hydro
« Opuha, Alpine Energy (Networks South) 7 MW, 1999


Total: 621 MW

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