Genesis seeking Government cash

By CHRIS DANIELS energy writer

State-owned power company Genesis is asking for Government help to pay for its new gas-fired power station at Huntly.

No decision has been made on the request, but SOE Minister Mark Burton and Finance Minister Michael Cullen have agreed to "a full investigation of Genesis' proposal that the Crown effectively underwrite the development of the e3p power station".

E3p is the name given by Genesis to its plans for a gas-fired power station, to be built alongside its existing Huntly power station, expected to cost at least $400 million.

Genesis yesterday refused to comment on its underwriting request, saying it was commercially sensitive.

The Government's consideration of the suggestion shows a continuing shift from the usual hands-off approach to state-owned enterprises in the energy sector, a move stemming largely from the recent autumn drought and potential power crisis.

Three of the top four big power generator retailers - Genesis, Meridian and Mighty River Power - are state-owned enterprises.

Why Genesis, which has always turned a profit and paid a dividend, is asking for Government underwriting is not clear, but it could relate to the uncertainty faced by thermal power generators over gas supplies.

Already delayed by one year in its plans because of this uncertainty, Genesis may be seeking Government underwriting to placate bankers who are nervous at the prospects of bankrolling a power station that sits idle waiting for new gas contracts to become available.

Burton said yesterday that the Government "has considered supporting the construction" of the new station. "This is a natural result of the Government's desire to minimise the risk of New Zealand being caught by another dry year such that it experienced this year."

He said the Government had not yet decided whether to support the power station.

No more information would be released as it could "compromise further discussions".

Meridian, the largest generator in New Zealand, is not receiving any Crown underwriting for its Project Aqua canal plan for the lower reaches of the Waitaki River, expected to cost at least $1.3 billion.

New Zealand's largest private sector power company, Contact, last year shelved its plans for a similar gas-fired power station at its Otahuhu site when it was unable to secure enough gas for its operations.

A new power station of the type proposed by Genesis could cost between $400 million and $500 million.

It is expected to begin providing electricity by 2006.

Genesis last year made a profit of $48.1 million, up $7 million from the year before.

It paid a dividend of $24.2 million to its Government owner.

Genesis generation

* Huntly Power Station, 1000MW.

* Tongariro Hydro Scheme, 360MW.

* Waikaremoana Hydro Scheme, 142MW.

* Te Awamutu Co-generation Plant, 54MW.

* Kinleith Co-generation Plant, 40MW.

* Ha Nui Wind Farm, 3.5MW.

* E3p (proposed), 365MW.