Contact Energy throws hat in ring for NGC stations

By CHRIS DANIELS

Contact Energy, New Zealand's largest listed power company, has declared its interest in buying the Stratford power station and Cobb hydro station from NGC.

The former Natural Gas Corporation is getting out of the power generation and retail business, preferring to focus on metering services and gas transmission.

Contact yesterday said it was seeking approval from the Commerce Commission to buy the NGC stations, which have an estimated value of more than $400 million.

NGC shareholders should be happy knowing that at least three parties are interested in bidding for the stations.

State-owned enterprise Meridian, the country's largest generator, has already said it is interested in the Stratford station.

Stratford would give Meridian a natural hedge against dry years that constrain its ability to generate electricity at its South Island hydro stations.

One of the attractions of the Stratford station is that it comes with a gas supply. This would be particularly enticing for Contact, which this year had to shelve plans to build a gas-fired power station at Otahuhu because it could not be guaranteed enough gas to run it.

Genesis, which is about to start building a gas-fired station next to its existing Huntly plant, has also said it is interested in bidding for the Stratford facility.

Owning Stratford would give it a source of generation close to its retail customer base in the lower North Island.

NGC values its generation assets at $547.8 million.

Last week, it said Mighty River Power had agreed to buy its half share of the Southdown power station and a production contract with the Rotokawa geothermal station.

NGC pocketed $39.5 million from the deal.

Contact's interest in NGC's stations may raise the issue of whether it is still interested in buying some Australian assets of US company NRG, mainly a coal-fired station in South Australia.

Despite announcing its interest in the NRG sales in July, Contact has given no further information on the bidding.

However, the power company may provide more details when it publishes its annual financial results on Thursday.

Contact does have one Australian investment - 25 per cent of a coal-fired power station near Oakey, west of Brisbane.

The Oakey station can be remotely controlled and operated from within Australia or from the Otahuhu B station in Auckland.