Tuesday 22nd March 2016
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Meridian Energy and New Zealand Aluminium Smelters have pushed out the deadline for the Tiwai Point smelter operator to give a year's notice to reduce its power supply to 400 megawatts until July.
The companies today agreed to push out the period to July 29 from April 30, giving NZAS more time to assess its capital needs and the Electricity Authority's transmission pricing, Meridian said in a statement. NZAS can give a year's notice to Meridian reducing its power contract from the current 572MW supply, and can exercise that right for a second time after April 30, 2017.
"This extension allows NZAS more time to evaluate its future capital requirements over coming years for the plant before making a decision on the contract volume," Meridian chief executive Mark Binns said. "It will also give the smelter time to factor in outcomes of the Electricity Authority's second issues paper in relation to transmission pricing which may deliver the smelter a significant saving on transmission costs."
The smelter chews through about a seventh of New Zealand's electricity, supplied by Meridian. Rio Tinto-controlled NZAS forced the contract to be renegotiated when the government partially privatised Meridian in 2013 as it scaled back production in the face of slumping aluminium prices.
Meridian and NZAS amended the contract last year, giving the smelter an annual option to close or partially close the facility.
The power company's shares rose 3.4 percent to $2.57, and have gained 4 percent this year.
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