The embattled Tiwai Pt aluminium smelter has reduced its electricity load and cut production because of the low water levels in hydro lakes and spiralling wholesale power prices that "don't make sense".

New Zealand Aluminium Smelters said yesterday that it was reducing its electricity load from 572MW to 540MW because of extremely low South Island hydro lake levels.

The reduced electricity load would cut production capacity at the smelter by a further 5 per cent, or about 400 tonnes, a week.

NZAS general manager Ryan Cavanagh said the company was working closely with Meridian Energy to conserve hydro lake levels, but was conscious of the impact this could have.

"We are working with customers and suppliers to minimise any adverse impact to production schedules," Cavanagh said.

On March 7 the prices averaged $277/MWh but ranged between $114 and $551/MWh, his blog said.

On March 8 the price exceeded $600/MWh.

Cavanagh said inquiries were being made to the relevant authorities on the reason why electricity prices had escalated so quickly.

Lake levels were below average but the way prices had shot up was a real concern, his blog said.

"Meridian have to take action to ensure they don't breach their consents . . . but as I said before, the real issue is why power prices have shot up so quickly in the last week.

"This doesn't make sense."

- © Fairfax NZ News