16 Feb 2016

Contact joins calls to keep Huntly open

6:30 am on 16 February 2016

Listed company Contact Energy has added its voice to suggestions the coal-fired power plants at Huntly might stay open after all.

Genesis Energy's Huntly Power Station.

Huntly Power Station Photo: Genesis Energy

Genesis Energy announced last year that it would shut them down in 2018 because their fixed costs were too high.

They are New Zealand's last two coal-fired power plants, with a capacity of 500 megawatts.

Since then, several industry leaders and commentators have suggested they might have to stay open, despite Genesis' pledge to shut them down.

In the front line was Meridian Energy, which could run short of electricity during a future cold, dry winter.

But Transpower has also warned of risks, saying the security of supply in 2019 was 'highly uncertain'.

Since then, Genesis chief executive Albert Brantley has suggested the plants could stay operative after all.

"We have been open that if we can see an economic justification for doing so which allows us to make a reasonable return for our shareholders, then we will do that," he told RNZ last month.

"We are engaged in discussions with various parties right now and we will continue to look for solutions."

The chief executive of Contact Energy, Dennis Barnes, has now added his voice to this debate.

Speaking at the release of the company's six monthly result, he warned of a power shortage in the North Island if Huntly closed.

"I think it is incumbent on us to find the lowest cost solution," he said.

"I believe the lowest cost solution is Huntly staying open. Some of our competitors have been more forceful in that view.

"But we are as an industry having bilateral negotiations on what cost we are prepared to bear on behalf of our customers."

Genesis had said earlier that any agreements on Huntly would have to made this year to allow time for the Huntly decision to be revised.

Contact Energy said any deal would have to be reached in principle by June.

If that was not done, the firm might have to look at enlarging the capacity of its gas-fired plant at Stratford, for which resource consent was partly in place.