King Country Energy will not proceed with proposed Mokau hydro scheme

King Country Energy announced today it will no longer pursue the resource consents required for the
proposed 9.6MW hydro-generation scheme along the Mokau River, 4.3 kilometres downstream from its
existing Wairere Falls dam.

The company began the resource consent process on the project in 2004. Chairman, Brian Gurney, cited
consenting delays, mounting costs and significant increases in the expected capital cost as the primary
reasons for shelving the development.

“In January, Waikato Regional Council granted us the supplementary consents required to construct a roller compacted concrete dam on the Mokau River. Up to that point, King Country Energy had spent around $2.5 million on the consenting process. However, we have a long way to go until consents may be granted and estimate we would need to invest a further $0.5 million to complete the process.

“The economics of developing the Mokau hydro scheme are very challenging. Even if we gained resource
consent, we would be unable to justify building the plant for many years, unless there is a significant
increase in the forecast wholesale electricity price path. Therefore, at this point, the Mokau project is
economically infeasible,” explained Mr Gurney.

King Country Energy CEO, Rob Foster, said resource consenting processes and the high costs of
securing consents disadvantage smaller electricity generation developers.

“Unfortunately, high consenting costs on smaller developments are a significant hurdle, therefore
small operators like King Country Energy can only pursue lower-risk developments that provide an
appropriate rate of return. That means it can take smaller generators a lot longer to find the right
project and get it online.

“However, King Country Energy is determined consenting costs won’t become a barrier to adding
to our generation portfolio. We are continuing to actively pursue other generation options because
our aim, in the medium-term, is to increase our generation capacity and minimise our reliance on
the electricity hedge market,” said Mr Foster.