The New Zealand government has today given the go-ahead for Meridian Energy to proceed with the sale of two hydro plants on the South Island to Genesis Energy.

The sale of Tekapo A and B power stations is part of a package of Government reforms aimed at improving the electricity sector. The plants are the first two of eight hydro power stations that make up the Waitaki Power Scheme. Meridian will continue to own and operate the remaining six power stations located from Lake Pukaki to Waitaki.

Meridian and Genesis Energy will work to a Water Management Agreement that allows both companies to utilise the water flowing through the interconnected lakes and canals to generate electricity at their stations. This agreement runs to 2025 and provides clear guidelines for operations to ensure the water is managed appropriately, including the management of high or low inflows through the Scheme, and to ensure that water will still be available to other users.

The sale of the power stations was one of a series of changes that the Government announced in December 2009 to improve retail competition in the industry, promote the reliability of electricity supply and improve governance in the sector through the establishment of the Electricity Authority.

The sale is due to take effect from 1 June 2011.