Government-owned Mighty River Power said on Friday that it would apply for the necessary resource consents to fire up the 250MW Marsden B station from 2005, after engineers reported the plant was in good condition.

Mighty River chief executive Doug Heffernan said the company would spend $NZ90-100 million recommissioning the station, with the aim of it providing emergency reserve generation in any future winter power shortages from 2005. The government earlier this year announced it would pay generators handsomely to keep some electricity generation capability "in reserve" for future dry, cold winter power crises.

Heffernan said a new chimney needed to be built, to replace the original one knocked down six years ago, along with new fuel lines and tanks and electronics for the station's control room. Mighty River was waiting for final details of the government's dry-year reserve plan before embarking on further engineering work for recommissioning the station.

Meanwhile, Contact Energy has completed its $NZ6 million upgrade of its New Plymouth power station to enable the aging gas-fired station to run on fuel oil, again, to be run during times of peak winter power demand.

However, the station has been idle since May 21 as Contact is reluctant to use much of its remaining entitlements to Maui gas and there are objections to the higher sulphur dioxide levels from burning the distillate.

On March 14 Contact gave the necessary three-month warning of its intent to burn fuel oil and so already has the necessary authority to burn distillate in emergencies. But it lacks the consent for long-term burning of fuel oil and Taranaki Energywatch, the Taranaki Heath Protection Unit and Auckland consultant Steve Goldthorpe have objected to the higher SO2 emissions that would be produced, said a Taranaki Regional Council spokesman.

However, recent heavy inflows to hydro lakes have already eased pressure on Contact's hydro generation system and, correspondingly, lessened the need to burn fuel oil at New Plymouth.

In February Contact announced plans to restore dual-fuel capability to the New Plymouth station to help the company cope with possible supply shortfalls and further supply interruptions from the dwindling Maui gas field. Company spokesman Pattrick Smellie said then that duel-fuel capability would give the 31-year-old station a new lease of life and the ability to run on gas or fuel oil or both.

The cost of electricity produced from fuel oil is believed to be about 10-11c per kilowatt hour, compared to about 5-6c a unit under existing gas pricing.