Thu, 14 Oct 2004

Hon. Roger Sowry National Energy Spokesman

Papers confirm electricity fears

Treasury papers released today confirm fears that the security of the electricity supply would be undermined, rather than enhanced, if Genesis built its gas generator at Huntly, National's Energy spokesman, Roger Sowry, says.

"The papers show that plant is not necessary for the security of supply and raises serious electricity and SOE policy concerns."

The papers say that:

* The risk-sharing arrangements of the sort proposed by Genesis are 'very unusual, and raise serious concerns'. * The fact that a risk-sharing arrangement is required 'is a clear indication that the proposal carries more risk than shareholding Ministers are usually willing to countenance'.

They also say that if the Government underwrites support it will send negative signals to investors because it would:

* Sharply increase supply capacity,causing investors to defer plans for substantial new capacity investments. * Add to the fears of private investors about competing with SOEs. * Undermine market machanisms for investment in baseload capacity.

"These papers highlight the many misgivings over the project, and confirm what National has been saying all along, that the project is flawed," Mr Sowry says.

"If it proceeds it could throw future investment into new generation into doubt, and we cannot afford that.

"But what the papers do not show is how much the risk-sharing is going to cost the taxpayer. That's the real question we want answered."

ENDS

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