Hon Roger Sowry MP National Party Energy Spokesman

06 May 2004

National backs lines company generation capacity

Energy spokesman Roger Sowry has revealed National Party plans to support law changes that would allow lines companies to generate unlimited power.

"Today, I am able to announce that the National Party will support lines companies being able to enter into generation, with no limit on the amount of generation they may own - subject to a continuation of the rules currently separating the lines business," he told an Energy Trusts Conference in Wellington today.

"Issues of regulatory or access terms and conditions will need to be examined and monitored so as to ensure a distribution service could not raise barriers to entry for other generators.

"Clearly, moves to open up the ability of lines companies to enter into the generation market will mean that the issue of lines companies being able to re-enter the retail market will need to be re-examined.

"Allowing total vertical integration is an issue that I intend to examine over the next few months - as I do wonder if we will see significant growth in generation by lines companies without allowing re-entry into retail as well.

"Prior to the current restrictions being introduced in 1998, lines companies were significant generators owning 1,100 MW of generation, 740 MW of which was constructed in the 1990s.

"In coming to a decision to allow the re-introduction of lines companies into the generation business, the National Caucus has also taken the time to look at the reasons for the restriction enforced in 1998, and the consequences of continuing with that restriction.

"I believe there is the likelihood that if the current restrictions continue, then lines companies will look to invest in the electricity sector offshore, and that they may look at investing in non-core businesses in New Zealand.

"It seems to us to lack commonsense to have investment capital move to offshore generation projects, or away from generation altogether, when we face a very real crisis and the need for far greater investment in generation here," Mr Sowry said.

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