Verve wins 100MW Gindalbie contract

STATE-OWNED electricity generator Verve Energy has been selected to supply power to Gindalbie Metals’ Karara iron ore project, making it the winner of Western Australia’s biggest contested electricity contract in more than a year. Verve will supply one million megawatt hours annually over a 15-year period, which is equivalent to the output from a 100MW power station. The agreement adds to the likelihood that Western Power will proceed with construction of a new transmission line to the Mid West, which will be needed to link Verve’s power stations with the Karara project. Verve’s main competitor for new electricity supply contracts is Rick Stowe’s Griffin Group, which is developing the Bluewaters coal-fired power station at Collie. Griffin won a competitive tender last year to supply 150MW of power to the Boddington gold mine and is believed to be in negotiations with state-owned energy retailer Synergy to supply up to 400MW of base load power. The limited supply of gas in the state’s South West, and its sharply increased cost, means that Griffin is the only generator capable of supplying such a large volume of electricity to Synergy. The power supply contract is another major milestone for Gindalbie’s Karara project, which will cost $1.8 billion to develop and is due to commence production in early 2010. Verve managing director Shirley In’t Veld welcomed the agreement as a landmark for the company and described it as an example of WA’s new robust electricity market at work. Gindalbie’s decision indicates that Verve is still able to compete with private sector generators despite being weighed down by vesting contracts with Synergy, which are losing it money. It also indicates that the 3,000MW cap imposed on Verve by the state government – which was meant to ensure that new generators could enter the deregulated market – has not stopped it winning new contracts. Mark Beyer

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