Contact Provides Additional Gas To Genesis For Winter 2003
Contact Energy today announced that it has entered into arrangements with Genesis to provide additional gas to the
Huntly power station for use during this autumn and winter.
Under the arrangements, Contact will bring forward the delivery of some gas already contracted to Genesis, but which was
otherwise due for supply in future years. The quantity of gas available to Genesis under this mechanism is up to 4.6 PJ,
equivalent to around 450 GWh of electricity. This gas is being supplied at the price provided for under the existing
supply contract between the companies. Gas taken under this mechanism will have the effect on Contact of 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 was already
contractually committed to provide. Contact is making this gas available despite the fact that its own gas inventory is
already fully committed. Contact will need to ‘backfill’ the gas sold under this mechanism, and there is likely to be a
significant cost associated with this.
The price at which additional gas is being offered to Genesis reflects the expected cost of backfill. The volume of gas
available under this mechanism is currently 40 TJ/day, enough for approximately 180MW of production. The aggregate
quantity to be supplied will be determined in light of Contact’s ability to backfill these sales and ensure that Contact
has sufficient gas for its immediate needs. Gas taken by Genesis under this mechanism will increase Contact’s earnings
in 2002/03. The magnitude and timing of costs associated with ‘backfill’ is uncertain at this point.
Contact hopes these arrangements will allow the Huntly power station to increase its output, and take some of the
pressure off hydro storage during this winter.