Integrated energy company, ERM Power Limited (EPW) has increased its stake in the Oakey Power Station in Queensland to 83.33% and has taken over as the operator of the power station. Oakey Power Station is a 332 megawatt (MW) two unit peaking power station with dual fuel capability (gas and distillate) that is located at Oakey, about 150 kilometres west of Brisbane.
ERM Power increased its effective interest in Oakey from 62.5% to 83.33% at a cost of $26.1 million. The company has taken over as operator of Oakey from Contact Energy Limited and now operates three power stations with a combined capacity of 982 megawatts (MW), compared with 650 MW previously. ERM Power has added 235 MW of capacity from Oakey to its generation this financial year at a cost (total debt plus equity) of less than half of the estimated replacement cost of, and without the construction risk of, an equivalent power station.
Under the transaction, Contact Energy exited its 25% interest in Oakey for $31.3 million. ERM Power increased its effective interest by 20.83% for $26.1 million with an unrelated private investor increasing by the remaining 4.17%. The $26.1 million was funded by $8.8 million from ERM Power’s existing cash reserves; and $17.3 million related to ERM Power’s share (83.33%) of net proceeds of an Oakey project debt refinance.
Managing Director, Philip St Baker, said Oakey Power Station is an outstanding asset which has operated at less than a 5% capacity factor during its 12‐year life and is expected to grow in value to ERM Power over coming years. “Oakey is in excellent condition, with high reliability and a long remaining life, and it is located in one of the fastest demand growth regions of Australia,” Mr St Baker said.
ERM Power (EPW) is an integrated energy company which operates electricity sales, generation and gas procurement businesses. Founded in 1980 as a specialist energy advisory firm, it grew through deregulation and privatisation to become one of Australia’s largest private energy sector companies before listing on the Australian Securities Exchange on 10 December 2010. ERM Power is leveraged to the forecast growth in the Australian electricity market through its sales business, ERM Sales, which focuses on large business customers, and its generation business, which focuses on low emission gas‐fired assets with long term contracts. Oakey Power Station is a 332 megawatt (MW) two unit peaking power station with dual fuel capability (gas and distillate). Oakey has a long‐term power purchase agreement (PPA) with AGL that runs until the end of 2014.
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