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Stalled Gas Power Plant A Warning, Opportunity

3 May 2002

Stalled Gas Power Plant A Warning, Opportunity - Greens

News that Contact Energy has postponed plans for a huge gas fired electricity plant at Otahuhu serve as both an opportunity and a warning for New Zealand, Green co-leader Jeanette Fitzsimons said today.

"With the Government's announcement last Tuesday of its renewable target - to generate another 30 PJ of energy a year through renewable energy sources - the stalling of this gas plant really opens an opportunity in the market for renewable alternatives.

"It also serves as a warning because Contact Energy are concerned about being able to secure the necessary gas contracts for this plant," said Ms Fitzsimons.

"Gas in the future is not going to be cheap and abundant as it was from the Maui field. We should use our gas supplies as efficiently as possible which is as a direct fuel in homes and businesses. We have the infrastructure already in place for this. We cannot afford to waste gas in turning one fuel into another."

Ms Fitzsimons said one of the main barriers to New Zealand meeting its commitments under the Kyoto Protocol were plans for two large electricity plants of which the Otahuhu Plant was one.

"A carbon tax would have guided investment away from unsustainable fossil-fuelled plants like Otahuhu into wind, co-generation with wood and efficiency investments. Given that there is to be no carbon tax for at least five years to act as a mechanism to promote renewable energy, the Government must now set very strong policies and mechanisms to meet its renewables target," she said.

"There is now a huge opportunity for the Government and the market to fill the gap of the Otahuhu Plant with renewable energy solutions.

"We are also concerned that one reason cited by Contact for putting the plant on hold is the likelihood that generators will be required to offer some hedge (fixed price) contracts on the open market to reduce the market manipulation of vertically integrated generator-retailers," said Ms Fitzsimons.

"The electricity market is rapidly becoming one where generators are also retailers and buy and sell only to themselves. The whole point of the market is that the lowest cost electricity should be generated first and buyers should have a choice."

"The Greens agree that there should be mandatory hedge tendering and urge Government not to back down under lobbying from the industry."

Ends

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