The Australian supreme court has ordered Energy Australia to honour a 35 year power purchase agreement (PPA) with National Power. The move is expected to allow US-based National Power to begin construction of the Redbank Number One power plant at Warworth, in Hunter Valley, New South Wales (NSW). Construction could begin this month.
Energy Australia agreed to purchase 1000 GWh each year from the plant. However the company later challenged the deal because National Power failed to bring joint venture partners by a required deadline of 1 February 1997.
Behind the challenge is a change in the energy situation in Australia. Since signing the original PPA on 28 March 1996, Energy Australia has found it can buy power from Victoria generating companies. The NSW treasury has also put forward the idea of privatizing Energy Australia.
Privatization has yet to be agreed. Meanwhile work on Redbank, which is being underwritten by loans organized by Dresdner Australia, should now proceed. National Power has until March 1998 to find joint venture partners. The project is expected to take two years to complete, coming on line by January 2001. The plant will burn coal tailings.