Genesis financing Kaipara station without Government help

Energy Minister Trevor Mallard says the state-owned power company Genesis has not asked for another underwrite to help it to build a new power station on the Kaipara Harbour.

Genesis was widely criticised in the energy industry when it last year revealed the Government was helping to underwrite a similar station it is building at Huntly.

As a state-owned enterprise, Genesis is required to act as any other commercial company, pursuing profits and paying out dividends to its Government shareholder.

Mallard, in a speech delivered in Wellington on the role of the state in the energy sector, said Genesis had not come to him asking for backing for the planned Kaipara station.

Genesis confirmed this week that it is investigating sites on the Kaipara for a station to be fuelled by the gas that it hopes will soon be coming from its part-owned Cardiff well in Taranaki.

News of the plan was "an interesting development", said Mallard, "given the fact that they have not come to the Government to ask for money, nor for any guarantees around gas supply.

"As Energy Minister, I am not a shareholding minister, so am not privy to information that Genesis may have in relation to this plan - but I certainly wouldn't make this investment unless I thought gas would be available."

The Government has said the underwriting, which it described as "risk-sharing", was extremely unlikely to be needed, and would be activated only if gas supplies for the Huntly station ran short. It said Genesis' commercial rivals could also have been helped, but the Huntly plan was the first that needed it.

A successful gas find and new station north of Auckland could delay the need for a series of new transmission pylons Transpower wants to build through the Waikato. This line, which has sparked an outcry from landowners, is needed by 2010, says the national grid operator.

Although the new station is not yet confirmed, it could delay building the pylons for several years.

Mallard was "neutral" on how a new station might affect plans to upgrade the grid into Auckland.

Genesis Energy is proposing a combined cycle gas turbine of an ultimate capacity of 360MW but present gas pipeline capacity will allow an initial station of 240MW.

Such stations can be built in two years and are relatively clean and non-polluting, making it easy for them to gain resource consent.