Today's letter: Smelter power

Last updated 12:00 06/12/2012

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OPINION: Isn't it about time we looked at how the smelter came into existence so we can put into perspective why it should pay a favourable rate for its power?

1. Our Government courted Comalco to build a smelter in New Zealand. Comalco wanted to build a smelter and a power station.

Due to the fact that the power station was to be built in a national park and that all power stations at the time were government-owned, the Government was unwilling to allow a private company to own and operate a power station in New Zealand.

2. The Government then struck an agreement with Comalco whereby the Government would build and operate the power station and sell power to Comalco, with the price formula built up using the following three criteria: Paying back the capital cost of the build over a certain number of years. Paying the maintenance and running costs. Paying a profit back to the Government.

3. In 1978, the Government of the time reneged on this agreement and started cranking the price up.

4. There is no way anyone should compare what domestic consumers pay for power with what the smelter pays for its bulk power.

In light of the above, isn't it about time this Government returned to the formula it used to lure Comalco here and then reneged on?

Maybe it should even entertain selling the power station to the smelter?
MARK HOSIE
Invercargill

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