Contact Energy And Crown Reach Agreement On New Dry Year Reserve Plant
Contact Energy Ltd will build and operate a new Crown-owned dry year reserve electricity generating plant on Contact’s
Whirinaki site, the company’s chief executive, Mr Steve Barrett, announced today.
“The new plant will be built in time for next winter and will add approximately 155 megawatts of new generating capacity
to the national electricity system,” said Mr Barrett.
The plant is expected be available for use by June 1, 2004.
“Along with other electricity industry initiatives, this project will assist in reducing the potential for a repeat of
this year’s threatened power shortages,” said Mr Barrett.
Under the terms of the Project Development Agreement, the Crown will own the plant, and lease the Whirinaki site from
Contact. Contact will act as the Crown’s project manager to oversee the plant construction, and provide operations and
maintenance services once the plant is completed. Contact will receive a fee as compensation for the use of the site and
associated rights by the Crown for 11 years. Contact will also receive an annual fee for operating the station under an
operating and maintenance agreement.
The Crown retains a right to divert the new plant to an alternative site, should it decide in the interim that this is
its preference.
In that event, Contact will be paid a fee covering costs incurred by Contact to the time of termination.
Mr Barrett acknowledged that Contact had originally proposed to build such a plant itself, subject to the negotiation of
offtake agreements with other electricity generators and major electricity consumers.
“However, in order to meet the requirement to be available by the winter of 2004 the Crown has sought alternate
arrangements. The Crown retains considerable flexibility and has structured these arrangements so that Contact Energy is
not disadvantaged in the event that the Crown’s view of its options changes.” he said.
“This project is important especially because New Zealand’s vulnerability to low levels of hydro storage is exposed
further by increasing demand and concerns related to the rundown of the Maui gasfield.”
In previous dry years, Maui gas was abundant and could be used to cover shortfalls in hydro capacity. However, with Maui
approaching the end of its commercial life and in the absence of major new gas field developments, that option is
becoming increasingly limited.