Mighty River Power has signed contracts to procure generation plant and begin constructing a 90MW, $275 million geothermal power plant in Kawerau, following final consent approval from the Environment Court.
The state-owned electricity generator and retailer made the announcement today on the back of reporting an annual profit (Net Surplus after Taxation) of $100.8 million for the year ended 30 June 2006.
Mighty River Power Chief Executive, Doug Heffernan said the Kawerau project would be the largest single geothermal development in New Zealand in more than 20 years and would produce more energy annually than all the country’s existing wind turbines.
Mr Heffernan said a major contract for engineering design, procurement and the construction of the Kawerau power station had recently been awarded to Sumitomo Corporation after an extensive tender process. The tender process attracted a large international interest because of the size of the project.
“The new power station will significantly increase local generation capacity in the region, meeting approximately one-third of residential and industrial demand in the Eastern Bay of Plenty region. A further advantage of the project is that investment in transmission lines is not necessary as the power station site is situated adjacent to industrial users,” said Mr Heffernan.
He said the project commitment was the culmination of four years of planning which included securing access to geothermal resources via negotiations with the Crown, Ngati Tuwharetoa (Bay of Plenty) Settlement Trust, Putauaki Trust and Norske Skog. Additionally, resource consents were secured which satisfied the local community including large industrial companies at Kawerau and other local landowners.
“Geothermal exploration at a total cost of $50 million had been undertaken on the Kawerau reservoir over the past 2-3 years and further construction activity will commence on site in November 2006.”
Mr Heffernan said that in addition to this major investment at Kawerau, Mighty River Power is well on track to complete the installation of a third generator at its gas fired co-generation plant at Southdown, which will lift total generation capacity to 170MW. Systems tests will be conducted in November with the generator expected to come online in December, just twelve months after project commitment.
Mr Heffernan said expanding its generation portfolio remains Mighty River Power’s focus having posted a reasonable financial result for the year to 30 June 2006.
The Net Surplus after Taxation was however down $20.4 million on last year primarily due to increased depreciation charges. Capital expenditure rose significantly to $148.4 million, an increase of $40.2 million reflecting the Company’s commitment to investing in new generation capacity and exploring for gas and geothermal resources. This year’s ordinary dividend of $50.4 million was paid after balance date and represents a $14 million increase on 2005. After payment of the dividend, the Company’s debt levels would be at similar levels to 2005.
The Company also recently announced a $300 million bond issue to strengthen the maturity profile of the debt facilities that will support the Company’s generation development and fuel exploration programmes.
Mighty River Power Chair, Carole Durbin said the Company’s financial result and growth of its business was pleasing, as was the commitment to the major geothermal development at Kawerau.
“Over the last 12 months we have continued our development as a diversified and integrated energy company. On the generation side we have made significant progress in the exploration, consenting and now construction of two new generation projects and we’re also pleased to have finalised agreements around our 35-year resource consents for the Waikato Hydro System.
“On the retail side of the business, Mercury Energy’s customer numbers climbed from 317,000 to 330,000, including 24,000 dual gas and electricity customers. This growth is a reflection of its focus on providing the best customer service, as recognised by the 2006 CRM Award for Best Customer Service in the Electricity Retail Sector, the third year in succession we have won. Metrix, Mighty River Power’s metering business, is also making good progress trialing more accurate and efficient measurement technology,” she said.