|Thursday, 1 May 2003|
Neil Ritchie, New Zealand
Contact Energy is to sell Genesis Power more gas for its Huntly power station to help alleviate New Zealand's looming power supply problems this autumn and winter.
Wellington-headquartered Contact Energy last night said it would bring forward the delivery of up to 4.6PJ of gas already contracted to Genesis, which would be equivalent to around 450 GWh of electricity, but which was otherwise due for supply in future years. This gas would be supplied at the existing supply contract price and would mean Contact bringing forward revenues and earnings from future years into 2002-03.
Contact has also agreed to supply some additional gas to Genesis for this winter, beyond that which it is contractually committed to provide. Contact said it was making this gas available despite the fact that its own gas inventory was already fully committed and that it would have to 'backfill' the gas sold under this mechanism. There would, however, likely be "significant" additional costs associated with this, Contact warned.
The volume of gas available under this mechanism was currently 40 TJ/day, enough for approximately 180MW of power. The aggregate quantity to be supplied would be determined in light of Contact's ability to "backfill" these sales and ensure it had had sufficient gas for its immediate needs.
The magnitude and timing of costs associated with 'backfill' was uncertain at this time.
Contact said it hoped these arrangements would allow the Huntly station to increase its output, and take some of the pressure off hydro storage during this winter.
The 1000MW Huntly power station, the largest thermal plant in this country, is seen as having a critical role in meeting peak winter power demand, particularly if hydro lake levels remain low during the next few months. Genesis has already announced plans to use additional coal, some domestic and other loads from Queensland and Indonesia, at the dual-fuel Huntly station during this critical time.
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