Government silent on Genesis cash

By CHRIS DANIELS energy writer

Treasury officials are still pondering a request from state-owned power company Genesis for financial backing for a new Huntly power station.

Genesis yesterday said it would build a new, 25 megawatt windfarm near Waiuku on the Awhitu Peninsula.

Chief executive Murray Jackson also told an energy conference in Wellington this week that the company was interested in buying the yet-to-be built oil-fired power station in Hawkes Bay.

Genesis would then convert these Whirinaki turbines to a more efficient and powerful "combined cycle", gas-fired plant for an extra $100 million.

He did not make it clear where the money to buy the Whirinaki station would come from. Genesis is already asking the Government for support to build its new Huntly station, which it calls "e3p".

Finance Minister Michael Cullen this week refused a Business Herald request for details of the financial underwriting proposal, which is now being studied by Treasury officials.

"I can confirm that along with a number of other options, the Government has considered supporting the construction of Genesis's proposed new, combined-cycle power station at Huntly," he said.

"The Government clearly wishes to minimise the risk of New Zealand being caught by another dry year such that it experienced this year, however the Government is also unwilling to consider proposals that shift otherwise normal commercial risk from state-owned enterprises.

"As you might expect, evaluating projects such as e3p involves the Crown in commercially sensitive discussions.

"Premature disclosure of such information could seriously prejudice the Crown and Genesis."

The underwriting request was referred to in official papers released under the Official Information Act.

They showed that wrangling between two state-owned enterprises - Genesis and coal-mining company Solid Energy - led to a long delay in the stockpiling of coal for dry-year reserves at the Huntly station.

Such a lack of reserve coal for the Huntly station prompted much of the high-level concern at the prospect of winter power cuts due to a lack of rainfall in the South Island hydro lakes.

Genesis now imports Indonesian and Australian coal, which it ships to Tauranga and then trucks to the Huntly station, which was built on top of a coal field.