The deal, announced today, secures Contact Energy's rights to buy all electricity generated at Top Energy's Ngawha power station for the next three years and includes a right of renewal option for a further two years.

There are plans to almost triple the Ngawha station's present 9MW output and Contact has the right to buy that additional power. Contact Energy retails electricity to around 90 percent of Northland power consumers, who are connected to Top Energy's lines network.

Contact Energy key account manager Bryce Croom says the Ngawha plant improves Contact's capacity to manage transmission system constraints that can affect the region as electricity is distributed from farther afield on the national grid. "Because Northland is at one end of the national grid, quality and security of supply can be disrupted."

Top Energy chief executive Roger de Bray said the agreement gave the company security of guaranteed earnings up to five years out, "which in the context of an uncertain environment for power generation and fluctuations in demand and pricing, is a very significant contract for Top Energy and the Far North".

The contract provided Top Energy with the commercial basis for the planned expansion of the power station to approximately 25 megawatts, which would mean 70% of all electricity consumed in the region would be produced locally.