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Cloud over Water Corp’s wind deal
Credit: Peter Kerr, The West Australian | March 7, 2013 | au.news.yahoo.com ~~
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Water Corp’s ability to manage complex electricity contracts is under fresh scrutiny after it emerged the utility signed a contract to take the entire output of the delayed Mumbida wind farm near Geraldton – despite State-owned power retailer Synergy rejecting the same deal.
The $130 million 55 megawatt wind farm, a joint venture launched by Macquarie Group and the State’s generator Verve Energy, was due to be finished last November. It is not expected to be fully operational until later this year, although Verve last night defended the project.
Water Corp, for the third day running, refused to answer specific questions about the Mumbida contract, or its separate deal to pay up to $30 million extra for the power it gets from Bluewaters coal-fired power station in Collie.
That transaction was part of a rescue package to help out private debt-laden Griffin Coal, by allowing Bluewaters to pay more for the coal it gets from Griffin.
Synergy baulked at a similar deal with Bluewaters, a decision which is estimated to have saved taxpayers about $60 million.
The higher-priced tranche of power from Bluewaters starting in 2020 is being offered to the private sector, although one of WA’s biggest energy buyers Alinta Energy said, given the risks of the long-dated contract, it was an unlikely buyer.
Separately, the troubles at Mumbida and the Muja AB coal plant joint venture in Collie contributed to losses of $41.7 million for Verve over the past two years.
In addition Verve is understood to have tipped at least $25 million worth of equity into Mumbida.
Macquarie last year sold its 50 per cent share in the project to Infrastructure Capital Group.
Market sources told _WestBusiness _that the banking giant managed to extract up to $33 million in fees and profits on the sale, placing a question mark over the return taxpayers will see on the project.
Those same sources said that, at the time the joint venture was set up, Synergy was offered the Mumbida off-take deal, but rejected it in favour of the superior prices on offer from the UBS-backed Collgar wind farm in the Wheatbelt.
Verve said last night that the Mumbida wind farm was on budget and electricity would be flowing before October. “Joint ventures are a source of private investment in WA’s energy market without impacting State debt,” the spokesman said. “They provide for a sharing of risk and reward, as well as expertise.”
Water Minister Bill Marmion has refused to discuss the matter, citing commercial confidence. Opposition spokesman Fran Logan said Water Corp should come clean.
“This is a problem of having government owned companies act as corporations,” Mr Logan said.
“They like to benefit from being taxpayer subsidised … but when it comes to openness and transparency they hide behind the veil of corporate secrecy.”
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