17 December, 2010
Whirinaki plant to be sold
The government has decided to sell the diesel-fired electricity generation plant at Whirinaki on the New Zealand market by tender instead of transferring it to Meridian Energy, Energy and Resources Minister Gerry Brownlee announced today.
“Meridian has advised the government that it does not want the plant, and the government considers that the electricity market will be best served by selling the plant by open tender,” Mr Brownlee said.
In 2009 the government accepted a recommendation from the Ministerial Review of the Electricity Market that the reserve energy scheme be abolished and the Whirinaki plant sold.
The review concluded that the reserve energy scheme reduced security of supply by encouraging market participants to rely on the then Electricity Commission to ensure security, and by discouraging investment by electricity generators in peaker plants.
Whirinaki comprises three diesel-fired units totalling 155MW. It was commissioned in 2004 under the reserve energy scheme and is operated by Contact Energy on a site leased from Contact.
The plant will be tendered subject to the following conditions:
• it may only be relocated during the summer of 2011/12 or 2012/13. This is to ensure the plant will continue to be available under the reserve energy scheme until the end of 2011, and that it remains available to assist with winter load in subsequent years;
• and the plant must remain in an operating condition in New Zealand for at least three years after sale – this allows time for the various measures the government is putting in place to improve security of supply (such as making it costly for generator-retailers to rely on conservation campaigns) to take effect.
The tender will be undertaken by the Ministry of Economic Development and Treasury. Further details on the tender will be available at www.med.govt.nz