Contact Energy signs deal with Maui that could see it use less gas

Contact Energy [NZX: CEN], one of New Zealand's largest electricity generators and retailers, has signed a new deal with Maui Development Ltd to purchase between 22 and 26 petajoules of gas over a two-to-three-year period that significantly boosts its overall forward supply.

The cost of the deal has not been disclosed and it replaces an agreement with MDL that expired at the end of last year. Contact generates about a quarter of New Zealand's electricity, has 22 percent of the electricity retail market, and is one of the largest wholesalers and retailers of natural gas.

In a statement to the NZX, Contact's chief generation and development officer, James Kilty, said the new Maui agreement, together with existing contract gas and reserves at its Ahuroa Gas Storage facility, gives the power company more flexibility to use less gas than prior years when running its thermal power stations and to tailor the volume of use based on its needs.

"It's pleasing to have reached this agreement with MDL which extends our close relationship," he said.

Contact has 12 power stations nationwide with its thermal stations including the combined cycle Otahuhu B and Taranaki, and Te Rapa co-generation.

Late last year Contact reached agreement with Genesis Energy to buy 27 petajoules of gas from its portfolio of gas contracts from Jan. 1, 2015 through until Dec. 31, 2020 and it has also announced a deal for 3 petajoules of swap gas.

It has been running down the amount of forward contracted gas volumes it has until now saying in its annual results last August that its gas storage allowed it to have a patient approach to contracting new gas. At that point it said it had 43 petajoules of contracted gas volumes in 2013, 29 petajoules in 2014 and only 8 petajoules for 2015 and 5 petajoules for 2016.

Contact also lifted the price of gas last month by an average $11 to $49 a year due to changing distribution and transmission costs it said were out of its control.

Contact shares recently traded at $6.62 and have risen 26 percent in the past year.

(BusinessDesk)