14 Apr 2008
Energy Developments Limited (ASX Code: ENE) advises that on Saturday 12 April 2008 its West Kimberley Power Project (WKPP) Broome Power Station experienced an incident that resulted in an interruption to the electricity supply to the town.
At the time of the incident the power station was on day 35 of the latest 60-day Reliable Operations test (RO test). The RO test requires the power station to supply electrical power within certain quality and reliability limits. Successful completion triggers the receipt of capacity and other fixed charges which can be accrued over the 60-day RO test period.
Supply was quickly restored in accordance with standard procedure and is again meeting the electrical power requirements of the town.
The likely cause of the incident was the delivery of a volume of out-of-specification gas from the Broome Fuel Storage Facility to the Broome Power Station similar to the cause of supply interruptions on 29 February and 8 March 2008. Investigations are underway to confirm this is the case and to assess the effectiveness of the remedial steps taken after the earlier events.
Under the terms of the Horizon Power Power Purchase Agreement the 60-day RO test is terminated at the time supply was interrupted, and recommences at Day 0 when the power is restored.
The termination of the 60-day RO test will result in further $1.5 million of capacity charge revenue, otherwise applicable to the 35 day period, being foregone.
Managing Director Greg Pritchard said the supply interruptions and resulting impact on the current half year earnings were very disappointing given that the Power Station and associated infrastructure have otherwise been operating well.
Mr Pritchard said that the remaining power stations of Derby, Halls Creek and Fitzroy Crossing were at days 55, 52 and 25 of their respective 60-day RO tests.
The West Kimberley Power Project will be officially opened by the Premier of Western Australia, the Honourable Alan Carpenter, MLA later today at a function in Broome, to be attended by other dignitaries and representatives of the Company’s project partner, Horizon Power.
Mr Pritchard noted that the WKPP underpinned Energy Development’s innovative strategy to replace diesel with LNG as the preferred source of low-greenhouse gas emitting energy for both electricity generation and heavy duty vehicles.
“The use of LNG as the fuel source at four of the five West Kimberley power stations will result in a 25 per cent reduction in annual greenhouse gas emissions” he said.
Mr Pritchard said that the Company’s market guidance for earnings before interest, tax and depreciation and amortisation (EBITDA) of 100-$105 million for the financial year ending 30 June 2008, had been revised down by $7 million. This revision reflects the combined impact of the foregone Broome Power Station capacity charges, lower electricity generation from the Company’s 32MW German Creek Coal Mine Methane Project in the first quarter of the calendar year due to a temporary reduction in gas supply by Anglo Coal, and lower Australian green credit prices.
Mr Pritchard noted that the revised market guidance was subject to the following:
• the timing of the WKPP ramp up and timely completion of the 60-day RO tests; and
• the pricing of Australian green credits in the current half of the financial year.
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