Power station buy backed ‘in principle’

Press, 13 April 1989, Page 4

Power station buy backed ‘in principle’

By

NIGEL MALTHUS

South Power backs “in principle” a proposal that electricity supply authorities from Christchurch to Otago band together to buy the Clyde and Roxburgh power stations.

The suggestion has come from Professor Tom Cowan, former dean of commerce at the University of Otago, and has the backing of the Otago Chamber of Commerce. The O.C.C. has submitted it to the Government’s electricity task force, which is hearing submissions on the restructuring of the electricity industry and is expected to report by the end of this month. Professor Cowan, who met South Power executives while formulating the plan, estimates that it could halve power prices over the next 25 years.

South Power’s marketing manager, Mr Graham Hodge, said South Power supported in principle any proposal that would reduce power prices. But the suggestion was "a bit premature” as it presupposed Electricorp’s power generation would be split up. “Even if it was, the question of ownership rests with the Government itself. Any group would have to tender, as we

would ourselves, for any assets the Government cared to put up for sale.” said Mr Hodge. The future of Electricorp Production is one of the main issues facing the task force. Its consultant, Putnam, Hayes, and Bartlett, suggests keeping generation under the control of one organisation, while the Electricity Supply Association, representing power boards and municipal electricity departments, says it should be split up for greater competition. South Power supported that view, said Mr Hodge. South Power was formed as a joint venture between the Central Canterbury Electric Power Board and the Christchurch M.E.D. It is the biggest electricity supplier in the South Island, big enough, said Mr Hodge, to consider buying a power station on its own. “If the task force decides that is a good idea, obviously we’d have to look at it, as I think anyone would.”

But if economies oi scale were possible by working with others. South Power would look at that too. he said.

The O.C.C. proposal is for an authority — “Southern Electric" — set up by legislation to supply power for consumers in the Christchurch-Otago region.

It would take over all the assets and liabilities of the electricity supplv authorities in the area and “acquire at fair value” the Clyde and Roxburgh dams.

The authority would provide power at a uniform bulk tariff to a series of subsidiary companies that would compete at the retail level, so keeping down expenses and tariffs.

According to the O.C.C. submission, the two dams would generate an annual average of 3745 gigawattshours of electricity, a close match with the 3757 GWh bought by the relevant supply authorities in the 1986-87 year.