Red faces as Sparky sits silent

By Mark Reynolds

Contact Energy's new electricity plant in South Auckland may not be completed until January.

The electricity and gas company's prospectus for a sale of shares to the public reveals that getting the Otahuhu plant up and running may involve a change in Contact's overall power production plans this year.

The problem is an embarrassment for Contact, because the power station featured in television advertisements last year promoting the launch of the company's retail electricity business.

The problem is also potentially an embarrassment for the Government as it moves to sell 60 per cent of Contact in the country's biggest privatisation by share float.

The prospectus shows that Sparky - as the power plant was cutely called in Contact's television advertisements - was expected to supply about a third of the company's gas-fuelled electricity.

But there are problems with a heat-recovery generator in the power station that have prevented Contact Energy's taking over the facility from Germany's Siemens group, the main contractor for the facility.

The plant should have been commissioned last November.

The construction contract with Siemens means Contact does not pay for the facility until it is in full working order. Contact is also covered for damages until the plant is fixed.

Contact has suggested that it will take control of the plant from Siemens next month, subject to the generator's being replaced in a four-month "downtime" period that will end in January.

That proposal would lead to Contact delaying the decommissioning of its ageing and inefficient New Plymouth power plant. The proposal would also involve Siemens paying money to Contact to compensate it for a loss of generating capacity.