Power price fall in smelter closure
If the energy-hungry Tiwai Point aluminium smelter was closed, the surplus power would be redirected to the rest of the grid, meaning lower prices for consumers, Transpower says.
Transpower chief executive Patrick Strange said at the state-owned enterprise's annual meeting yesterday that the company had no view on, or knowledge of, whether Tiwai Point's aluminium smelter would remain open, but it would be able to move quickly to get that surplus power redirected to the rest of New Zealand's grid "without spill" if it did happen.
The Tiwai smelter uses about 15 per cent of New Zealand's electricity; it is supplied by state-owned Meridian Energy's Manapouri generator. The generator's 824 megawatts would be transported through existing lines - which would need duplexing - to Lake Benmore where it would be transported north by the direct current network.
The two-year duplexing project would cost about $100 million and was already consented, originally for the Project Hayes windfarm in Central Otago which was withdrawn in January.
Transpower was prepared for the smelter to remain or close, Strange said.
A closure would cause prices to fall as excess power flooded the market, he said.
Just like growing potatoes, electricity was a market and subject to supply and demand.
"If Tiwai were ever to close we would have a surplus of generation and the price would decline."
The glut would last for a few years before generation would reduce to rebalance the market, he said.
Meanwhile, with Tiwai remaining open, prices were set to rise because of increased investment in the network, after several years of low investment leading to lower electricity prices in recent years, chairman Mark Verbiest said.
"We're very conscious that increasing electricity costs is a major issue for consumers and businesses and we have a commitment to keep prices as low as possible."
Also at the meeting, Transpower has reaffirmed its ownership of the South Island national grid after the Campaign Against Foreign Control of Aotearoa (Cafca) queried a reference to a controversial 2003 tax-avoidance agreement with an American investment bank in the state-owned electricity monopoly's latest financial report.
Strange said Cafca representative Colleen Hughes' question was a good one.
"And it's very nice to say that that's history."
- © Fairfax NZ News