Under the joint development agreement, AGL will look into procuring and transporting additional long-term gas supplies to the power station as part of the company’s wholesale gas activities.

Meanwhile, CS Energy would oversee the redesign and re-powering study, and also operate the upgraded Mica Creek station, which is planned to be expanded between 70 and 100MW by 2010.

AGL managing director Paul Anthony said the proposed expansion would improve operational efficiency and cater for anticipated growth in energy demand, in line with the planned future development of the Carpentaria minerals province around Mount Isa.

“This agreement with Queensland’s largest government-owned generator secures a platform for growth for both parties given the complementary nature of AGL’s and CS Energy’s future business interests in the Mount Isa region – a fast-growing region in Australia,” Anthony said.

“The JDA with CS Energy further cements AGL’s interests in Queensland, which includes the development of a 370MW gas-fired power station at Townsville and the proposed Papua New Guinea to Queensland natural gas pipeline in a 50 percent consortium with Petronas Australia Ltd.”

CS Energy chief executive Mark Chatfield also welcomed the new JDA relationship with AGL.

“Entering into this arrangement will enhance viability of the upgrade project by joining up with a partner that has the capability of securing competitively priced energy supplies from 2010 and utilising the complementary development and marketing skills of each organisation,” he said.

The JDA sets out terms for both AGL and CS Energy to work exclusively on this initiative and to jointly fund the cost of investigating the development.