$1b power station gets quick okay

Photo / Brett Phibbs

Contact Energy has used new fast-track rules to gain approval for a $1 billion geothermal power station but is not saying when it will start building.

The company says the Tauhara 2 development near Taupo will proceed "when market conditions allow".

Environment Minister Nick Smith said it was the first time in 20 years a major project had been granted consent in eight months.

Tauhara 2 was the first project processed under the national consenting process of the reformed Resource Management Act. The average time before the reforms was two years with some projects taking as long as eight years, Smith said.

"Long delays in getting consents for such renewable energy projects over the past decade came at a high economic and environmental cost."

The Resource Management (Streamlining and Simplifying) Amendment Act 2009 provides for a one-step decision-making process with a board of inquiry that is required to make a decision on consents within nine months.

The board has approved the application, with a number of conditions needing to be met by Contact.

Contact Energy lodged its application in March 2010 for consent to build Tauhara 2.

Smith said the construction and development of the geothermal power station would involve 350 jobs over the 33-month construction period and be a welcome economic boost to Taupo and the Central North Island.

Its 250MW output would be sufficient to power more than 200,000 homes or the equivalent of Hamilton and Tauranga.

Contact's chief operating officer, Graham Cockroft, said both the submitters and Contact's willingness to work through issues saw all but two of the 60 submissions withdrawn, and the station would be built on farmland about 5.5km northeast of the Taupo township.

Contact's credit ratings and stable outlook have been affirmed by Fitch Ratings, but improvements in the business have not been enough to warrant an upgrade for the top-10 company.

Fitch affirmed Contact's long-term rating at BBB.

"While Contact's current rating takes into account the improvements in operational flexibility including flexible gas supply arrangements in 2011, these are insufficient to warrant an upgrade and mitigate the effects of continued retail competition, ongoing high capex programme and exposure to variability in weather conditions over the medium term," said Fitch Asia-Pacific energy and utilities director Sajal Kishore.

- additional reporting NZPA