Energy-saving measures likely

Press, 26 September 1984, Page 1

Energy-saving measures likely

By

MICHAEL HANNAH

in Wellington The prospect of a steep rise in New Zealand’s energy bill next year is likely to force the Government to include conservation measures in its Budget in November. The Minister of Energy, Mr Tizard, yesterday confirmed that conservation was an urgent consideration for the Government, in light of several factors outlined in the 1984 Energy Plan, which he tabled in Parliament

Conservation measures are likely to involve fuel price rises, especially for coal and electricity, and incentives to encourage conversion to natural gas products from coal or electricity. The factors outlined in the Energy Plan which are expected to push up the energy bill next year include:

® A five-month shutdown of the Marsden Point oil refinery when the expansion project is completed, requiring more imports of oil and oil products. ® Coal imports, aimed at reducing pressure on the Waikato coalfields.

® Delays in the extraction of gas liquids, putting back New Zealand’s selfsufficiency targets. Mr Tizard said the Energy Plan did not take into account policy changes the Labour Government might adopt. The plan had been prepared for the previous National Government, he said.

One example was a 10 per cent discount, which placed a heavy loading in favour of a coal station ahead of a hydro-power station.

“But if you put up the price of coal you change the balance between hydro

The implications of Budget details were not spelled out in the plan, Mr Tizard said. Raising prices could act as a conservation measure both on demand

and on construction capital. Other measures being considered included the replacement of an insulation loan system, and education. He also considered that the price and age of equipment influenced people’s decisions to switch from one form of energy to another. “I don’t think proper weight has been given to the fact that most people are, in fact, tied into the fuel system they have got,” he said.

Mr Tizard referred to S resent efforts to reorganise le State Coal Mines Division into a purely commercial enterprise. This would have to consider the question of coal prices, as previous pricing practices had meant that the division had lost money.

Energy officials confirmed-’ that rises in the price of coal would flow on to electricity prices, as the Electricity Division was

State Coal Mines’ biggest customer.

“The net result of all that will be a decrease in the amount of effort going into capital development in the Ministry of Energy trading operations,” said one official.

Mr Tizard also confirmed that he was presenting a strong argument favouring a switch tongas use from coal and electricity. However, no consideration had yet been given to subsidising the capital cost. consumers faced in switching 10 The Energy Plan raised doubts about the ability of North Island coalmines to meet the planned demand in the time available. In particular, Mr Tizard criticised the previous Government’s commitment to huge developments such as the Ohinewai coalfield. The plan noted that there was no tolerance in the

mining programme for the extensive failure of any development Mr Tizard said various measures were being taken to relieve the pressure on the Waikato coalfields, especially by encouraging the use of gas and South Island coal for electricity generation. The plan also called for swift action to investigate the South Island lignites, and mentioned the possibility of importing coal.

Oil imports would also be required when the Marsden Point oil refinery expansion was completed and the refinery shut down for five months from next June. Mr Tizard said the country would be dependent on imported fuel and synthetic petrol from the Motunui plant He called for cooperation from all parties to ensure the period of importing refined products was kept to a minimum.

Delays to the gas liquids extraction plant were also noted in the plan, and Mr Tizard said this had put back self-sufficiency targets.

It was now expected the country would achieve a peak of 53 per cent selfsufficiency in liquid fuels in 1986, instead of nearly 60 per cent in 1987 as had been intended.

He said the Government would put more emphasis on alternative fuel programmes than was assumed in the Energy Plan. “Increased energy selfsufficiency, an equitable system of pricing, a reasonable and flexible programme of power development, which is also allied to regional development, and more effort in energy conservation are key elements in our policy,”' he said.

Details, page 2