PNCC project leader Chris Pepper said MRP would develop the wind farm along the Turitea ridge, overlooking the city, which lies in the Manawatu region in the south-west North Island.

MRP will make annual payments to the city council from the proceeds of the farm’s electricity sales.

Pepper said the agreement was conditional. But if all requirements were met over the next two months, a final decision could be made in early November.

MRP chief executive Doug Heffernan said the company needed to collect data on wind speeds at the Turitea site before it could determine how many and what size turbines would be appropriate.

But early indications were that the site might be suitable for a 120-150MW project, with the first turbines generating electricity from early in 2008.

MRP’s generation facilities are mostly hydroelectric, with some geothermal. The company is also considering further gas-based projects in addition to its Southdown co-generation plant in south Auckland.

If the MRP-PNCC project goes ahead it could be Manawatu’s fourth wind farm, after fellow government-owned Meridian Energy’s Te Apiti project, TrustPower's Tararua wind farm and possibly Christchurch's Windflow Technology’s 104-turbine project, though that it is still some way from development.