Meridian, Rio smelter talks continue as Labour-Greens plan muddies water

Friday 19th April 2013

Meridian Energy and the owners of its largest customer, the Tiwai Point aluminium smelter, are continuing to talk after an intense three days' face to face negotiation last week, with parties in both Wellington and Sydney crunching numbers on possible new deals.

Neither side will comment on the record, but BusinessDesk understands efforts to find common ground on a new 18 year supply contract continue.

Nor would the smelter owner Pacific Aluminium, a Rio Tinto subsidiary, comment on the potential to strike a further new deal in the future under a Labour-Greens government for lower power costs.

Labour and the Greens are arguing the cost of hydro-electricity is as low as $1 per Megawatt hour, and companies like Meridian are making "super-profits" by selling it at wholesale electricity market prices averaging around $65 per MWh in recent months.

The smelter contract, covering one-seventh of total New Zealand generation, is understood to be paying just under $50 per MWh for its load.

Pacific Aluminium has been advancing the argument to journalists and politicians that New Zealand's power prices are too high and should be charged at a price more based on historic and actual operating cost than pursuing the cost of the next cheapest unit of new electricity generation.

BusinessDesk.co.nz

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