The Commerce Commission today said it had received two separate applications to purchase Stratford Power Limited, a wholly-owned subsidiary of NGC Holdings and-or the assets of its Taranaki Combined Cycle plant (TCC).
Contact's application also seeks clearance to acquire all the shares in another NGC subsidiary, Cobb Power Limited, which owns the small Cobb hydroelectric power station near Nelson in the South Island.
Genesis Power and Contact Energy are now seen as the most likely contenders for the TCC plant sale process, which is likely to be concluded by NGC before the end of the year.
The 354MW TCC gas turbine plant at Stratford and the 34MW Cobb hydro power scheme are estimated to be valued at over $NZ400 million.
The Genesis and Contact confirmations comes two weeks after EnergyReview.Net predicted they would be among the top of several domestic and perhaps overseas companies interested in NGC's power generation assets, which NGC is divesting after its failed foray into electricity wholesaling and retailing.
One of the attractions of the TCC plant for Contact is that it is already involved in supplying gas to the Stratford station. Contractually Contact supplies Maui gas to the station, through selling to Fletcher Challenge Gas Investments Ltd, though an "internal" gas swap means the gas delivered actually comes from the nearby Tariki, Ahuroa, Waihapa, Ngaere (Tawn) fields.
Contact used to supplement its Maui gas entitlement for its New Plymouth power station with Tawn gas but no longer needs to do so as the aging station is being progressively shut down.
Contact, New Zealand's largest listed power company, earlier this year deferred its proposed third gas-fired station at Otahuhu, Auckland, citing uncertainty over future gas supplies post-Maui.
So buying the TCC package would largely eliminate that problem for Contact as present FGCIL owner Shell New Zealand or any new owner subsequent to Shell's divestment would be responsible for supply gas to TCC for the life of the station.
Meanwhile, Genesis, which is the dominant electricity supplier in Taranaki-Wanganui-Manawatu, wants TCC as it would provide embedded generation capacity and lower electricity transportation costs for its customers in the western North Island.
Wellington-headquartered Contact will not need to employ outside consultants to help it with its final bid for TCC as it already has an arrangement with its majority shareholder, Edison Mission Energy, for technical support. However, Genesis may still need assistance with completing the complicated TCC due diligence process.
A successful Contact bid could, however, raise the issue of whether it would still interested in buying some Australian assets of United States company NRG, mainly a coal-fired station in South Australia. Despite announcing its interest in the NRG sales in July, Contact has given no further information on the bidding, though it may provide more details when it publishes its annual financial results on Thursday.
Contact currently owns 25%of the 342MW Oakey power station, about 150km west of Brisbane, and 40% of the 300MW Valley Power peaking station, about 150km east of Melbourne.
Last week NGC said it was selling its half stake in the Southdown gas-fired station in Auckland, plus the output from the small Rotokawa geothermal station near Taupo, to Mighty River Power for approximately $NZ39.5 million.
