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26 September 2003 - A power plant on New Zealand's south island is to be built by the government to provide reserve capacity for dry years when hydroelectric generation is in short supply.

The NZ$150m ($89m) power plant will be located at Whirinaki in Hawke's Bay as, after negotiations for a plant at Tiwai Point fell through. Energy Minister Pete Hodgson said there were advantages in building the dry-year plant in the South Island, but the priority was to have it ready for next winter.

Talks about establishing the plant at South Island's Tiwai Point collapsed after aluminium producer Comalco sought several million dollars for access. Comalco owns the Tiwai Point aluminium smelter.

The power plant forms a part of the government plans to build reserve generation capacity for use in dry years in hydro-dependent New Zealand.

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