Thu, 12 Aug 2004

385 MW Power Station to go ahead

Genesis Energy's announcement of go ahead for 385 MW plant welcomed

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Genesis Energy's announcement that it will build a 385 MW combined cycle gas turbine plant, e3p, at Huntly was welcomed today by Finance Minister Michael Cullen and Energy Minister Pete Hodgson.

"The new plant will support economic growth and enhance New Zealand as an investment destination by bringing significant new generation on stream to meet medium term demand," Dr Cullen said.

The government facilitated the development by agreeing to share a limited amount of risk with Genesis around the long term supply of gas. Without that commitment from the Crown, Genesis would not have been able to proceed within normal commercial parameters.

"This risk sharing arrangement is a one-off to smooth the transition to a post-Maui environment in which alternative gas sources have yet to be confirmed", said Pete Hodgson.

"Both the government and Genesis Energy have already taken action to reduce this uncertainty: the government through the introduction this year of gas exploration incentives and Genesis Energy by entering long term contracts for Kupe, Mangahewa, McKee and Pohokura gas.

"Against this background, it is thought that there is only a slim chance of sufficient gas not being available."

Mr Hodgson said the government's advice was that e3p was desirable and that likely alternatives did not offer adequate levels of certainty.

He likened the Genesis Energy arrangement to earlier decisions to enable Meridian and Trust Power to bring forward 126 MW of wind capacity through the provision of emissions units, and to contracting Contact for the Whirinaki reserve generation plant.

Dr Cullen said the decision to support Genesis was pragmatic and reflected the government's foremost responsibility is to ensure new generation is built in a timely way.

ENDS

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