Contact Provides Additional Gas To Genesis
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