Origin Energy today announced completion of an electricity hedge purchase and gas supply agreement with the Braemar 2 Partnership that will support the supply of electricity products to Origin customers in Queensland.
The final agreements with Braemar 2 Partnership support the financial close and development of a second 450 MW open cycle gas-fired power station at Braemar in south-East Queensland (“Braemar 2”). Braemar 2 will commission during the first quarter of 2009.
Origin will purchase 300 MW of electricity hedges for a minimum of 10 years, with options over the additional 150 MW of capacity. Origin has also secured the right to supply a portion of Braemar 2 Partnership’s gas requirements during 2009 and 2010. The completion of the Braemar 2 agreements, along with a separate agreement to restructure the contractual arrangements with the owners of the Braemar 1 power station, leaves Origin with up to 825 MW of capacity from these two power stations.
Origin Chief Operating Officer Karen Moses said the contracts enhance Origin’s ability to supply retail customers and manage wholesale electricity price risk, while providing significant integration benefits for Origin’s operations in Queensland.
“The electricity hedge purchase agreement enables Origin to manage price volatility during peak demand, while the gas supply agreement supports the flexibility of our Queensland gas portfolio”.
“Together with Origin’s current power stations and those under development, the Braemar 2 contracts will help Origin meet rising electricity demand in Queensland and support the monetisation of Queensland’s extensive coal seam gas resources,” she said.
“Origin is committed to lowering the emissions intensity of its energy supply chain. Fuelled by coal seam gas, the Braemar 2 power station will create significantly less greenhouse gas emissions than an equivalent coal-fired power station,” she said.
Participants in the Braemar 2 Partnership are:
ERM Power 50%
Arrow Energy (ASX: AOE) 50%
