Aqua axing big setback for energy production: Hodgson

1.00pm

Energy Minister Pete Hodgson said today New Zealand's energy production hopes have been set back four years by the cancellation of Project Aqua.

Mr Hodgson said the price of electricity would rise by up to one per cent a unit because the cost of replacement generation was more expensive than the canned hydro scheme.

The cancellation was a setback, but did not automatically mean there would be power cuts in the future as demand grew beyond supply.

It was important now to find replacement projects to fill the void left by Project Aqua.

"What has to happen between now and 2006 is that a whole lot of ducks need to come into the queue that Meridian just vacated," Mr Hodgson said.

Project Aqua was not going to come on line until 2008 so could not be blamed for power cuts before then, Mr Hodgson said.

"Five hundred and seventy megawatts out of the queue is a problem. There is no doubt about that. That is four or so years growth in electricity generation and we have to find those four years from somewhere else," Mr Hodgson said.

"As far as new generation is concerned it is there... it is a bit further along than most people... would like to think it is."

He felt it was better that the Government knew about the cancellation now rather than in three or four years time.

The Government is looking at New Zealand's growing problems with its infrastructure as well as the need for better water planning.

State Owned Enterprise Minister Mark Burton said he had not considered directing Meridian to continue with the project.

"To do so would obviously been an expression of no confidence in the (Meridian) board. I have confidence in the board, they have looked at all the facts that are in front of them and made a commercial decision."

Prime Minister Helen Clark said her government and previous governments had ruled out building nuclear power stations "because with the abundance of sources of supply of energy we have here why would we even contemplate going down that route?"

- NZPA