Geotherm pans Contact for anti-competitive tactics

A Taupo businessman today launched a scorching attack on Contact Energy for what he described as "spoiling tactics" in vying to buy a block of land critical to his $350 million geothermal power project near Taupo.

Alistair McLachlan, managing director of Geotherm, a privately-owned geothermal generator, accused Contact of "anti-competitive and secretive behaviour" in relation to the potential land purchase in the Wairakei-Taupo area.

"In 2004, Contact sought unsuccessfully to prevent us from building our geothermal plant by contesting our resource application and the necessary water rights," Mr McLachlan said.

"Having failed there, it is now resorting to rights deriving from when it was within the Electricity Corporation of New Zealand (ECNZ)."

Contact, the country's second biggest listed company, has held exclusive land rights to extract geothermal fluid from the Taupo area since it purchased them from the ECNZ in 1995.

It has right of first refusal to buy the block of land in question, lot D, from Landcorp. Landcorp is selling lot D and four other blocks of farmland.

Geotherm has tendered to buy all five lots, totalling 2500 acres, adjacent to land on which it is developing a geothermal power station, while Contact is looking to buy just lot D.

Geotherm plans to use some of the land for underground extraction and reinjection of geothermal fluids, but not lot D, which is in clear view of the Taupo township.

"Contact is seeking to buy only lot D. This is immediately upstream of our generation project and would have significant adverse effects on the viability of that project," Mr McLachlan said.

On its own, lot D was uneconomic for geothermal use, he added.

Contact chief executive, David Hunt, defended the move, saying the energy company was "following a proper and established process" in seeking to buy lot D.

"Contact has a number of geothermal interests in the Taupo region and we are exercising our rights to purchase this land because it fits with our ongoing business development plans," Mr Hunt said.

The latest saga is not the first time Mr McLachlan, who has owned farms in the Taupo region for the past 40-odd years, has locked horns with a major electricity operator.

Last year he filed a $400 million claim against Vector, alleging the Auckland-based lines company breached a joint venture agreement for developing a geothermal power station.

That venture, known as Mercury Geotherm, stalled in the 1998 during a power price slump and the power station was eventually sold to Contact Energy.

Geotherm secured resource consent for its latest project, a privately-owned 60MW power plant, in 2004.

Contact is the biggest geothermal power operator in New Zealand, with the 181MW Wairakei power plant, the 55MW Poihipi plant -- formerly owned by Mr McLachlan and Mercury Energy (now Vector), and the 100MW Ohaaki plant.

Shares in Contact last traded down 5c at $6.69.

- NZPA