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Contact Energy to Fund $475 Million Geothermal Project

Feb. 22 (Bloomberg) -- Contact Energy Ltd., New Zealand’s biggest publicly traded energy company, plans a rights offer to help fund a NZ$623 million ($475 million) geothermal generation project on the central North Island.

The company today signed an engineering procurement and construction contract for the 166-megawatt Te Mihi project, Wellington-based Contact Energy said in a statement. The rights offer will be in the near term, it said, without providing further details. There will also be debt funding.

Contact, which is 52 percent owned by Australia’s Origin Energy Ltd., will build the Te Mihi project near the 52-year-old Wairakei plant, and when completed by mid-2013 will decommission parts of the older site. The company is developing plants powered by steam from underground vents amid concern that hydroelectric and wind-powered generation is too reliant on changeable weather.

“Geothermal energy is New Zealand’s most strategically important energy source,” Chief Executive Officer David Baldwin said. “It has a major advantage over other renewable energy sources because it doesn’t depend on the weather and as such, is always available to provide baseload electricity,” which is power delivered around the clock.

Contact today said net income fell 3.9 percent to NZ$83.7 million in the six months ended Dec. 31. The stock declined 1.3 percent to close at NZ$6.11, giving the company a market value of NZ$3.77 billion.

The successful Te Mihi group comprises McConnell Dowell Constructors Ltd., SNC-Lavalin Constructors Inc. and PB New Zealand, Contact said.

The company also has approval to build the Tauhara-2 steam project, which could generate as much as 250 megawatts of electricity, and is exploring the Taheke geothermal field also in the central North Island.

For News and Related Information: Most-read stories on Contact: {CEN NZ <Equity> MCN 1Y <GO>} On N.Z.’s power industry: {TNI NZ ELC <GO>} On N.Z. power prices, generation: {OHMA 17 <GO>} On global power markets: {VOLT <GO>}

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.

To contact the editor responsible for this story: Iain Wilson at iwilson2@bloomberg.net

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