More Questions In Latest Generation Decision

13 August 2004

More Questions Than Answers In Latest Generation Decision

The ENA today supported comments by Electricity Commissioner Roy Hemmingway about Government support for the new Huntly e3p power plant.

Mr Hemmingway was commenting on the Government’s announcement that it intended to fund a 385 MW gas-fired plant is to be built by a State Owned Enterprise, Genesis Energy, and sited next to Genesis’ existing Huntly power station.

ENA chairman Warren Moyes said the ENA supported the Electricity Commissioner’s concerns relating to the balance between private and public ownership in the electricity sector.

“This industry is in serious need of new private investment.

“The linked announcement of a government guarantee in case there isn’t enough gas available to keep the plant running will seem ironic to many lines companies.

“The Government’s regulation on companies operating in the lines sector has made it more difficult than ever to get private funding to support investment projects. The risks associated with regulation have increased companies’ cost of capital significantly, while the ban on line company involvement in electricity markets continues to lock out a large part of the industry that has the industry knowledge and resources needed to restore power supply security.

The Government’s decision to offer such favourable terms to one of its own players, while at the same time disadvantaging private companies, does not seem like the best way to ensure all sources of investment are sought to improve the country’s electricity supply problems.

“The decision to opt for yet another gas-fired plant just as New Zealand’s primary gas resource at Maui is running out is particularly worrying. The Government is sending a clear message to coal, wind and energy alternatives interests that the market signals we’ve been getting to look past gas should be ignored.”

ENDS

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