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Ban on thermal stations a regulatory nightmare


Monday, 13th October 2008

Media release by the Major Electricity Users’ Group (MEUG)

Ban on thermal power stations causes a regulatory nightmare

“The ban on thermal power stations causes a regulatory nightmare,” said Ralph Matthes, Executive Director of the Major Electricity Users’ Group (MEUG). He was commenting on the release of a discussion paper on draft regulations to implement and prescribe exemption criteria for the ban on new thermal power stations enacted recently by government.

“The discussion paper is a reminder that the legislative ban on new thermal power stations is all about reducing carbon emissions no matter what the additional economic cost to New Zealanders.

“The ban on new thermal power stations is over the top. The ban limits all new generation to either renewables or high cost and inefficient back-up thermal plant to support intermittent renewables provided that plant can obtain an exemption. New super efficient baseload Combined Cycle Gas Turbine plant, such as the existing TCC, Otahuhu B and e3p, are banned even though they would have lower electricity prices than some of the proposed renewable energy projects.

“This winter has shown how exposed New Zealand is to seasonal weather patterns. If it wasn’t for existing baseload gas and coal fired thermal power stations, blackouts would have occurred. Rather than banning baseload thermal plant, we should be encouraging more diversity for electricity generation; subject to generation investors themselves factoring in future carbon cost risks.

“The ban on thermal has had a chilling effect on investment in petroleum exploration. The timing of the ban when capital markets world wide are struggling to attract new investment couldn’t have come at a worse time. When most other countries are happy to migrate from largely coal based to gas based power plants, New Zealand’s approach of saying no to baseload gas but embracing weather dependent new hydro and wind generation is foolhardy.

“The regulations to implement the ban on new thermal power stations are an unnecessary added cost of doing business in New Zealand. Inevitably we will see electricity prices rising faster than they should and higher risks to security of supply because of the thermal ban . The sooner Parliament repeals the thermal ban, the better” concluded Mr Matthes.


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