Users force gas charges down

By Mark Reynolds

Three major gas users in Auckland have succeeded in forcing Natural Gas Corporation to reduce its pipeline charges to the city.

The move should ultimately be reflected in lower energy costs for Aucklanders.

Contact Energy confirmed yesterday it had signed a new 10 year contract to use Natural Gas Corporation's 80 kilometre stretch of pipeline that runs from Rotowaro, near Huntly, to Westfield in Souith Auckland. The new contract also secures transmission price benefits for the pipeline's other major users Qest New Zealand (formerly Enerco) and Southdown Co-Generation, which operates a power plant in South Auckland.

The costs for the new transmission contract have not been disclosed, but the charges have been cut after Qest, Contact and Southdown Co-Generation threatened to pay $80 million to build their own competing pipeline. The gas the three companies use represents about two-thirds of the total volume currently carried through the NGC pipeline.

NGC said in a statement that by securing Contact's transmission contract for at least another 10 years it had ensured that "all users of the NGC transmission system would gain benefits that would not be available if Contact had proceeded to build a bypass pipeline."

Contact chief executive Paul Anthony said the terms for the new contract were "competitive".