The Southland Times
Smelter hit by hike in spot power
Edited by : AL CIRCLE
2 min read
Dry conditions are forcing the Tiwai Pt aluminium smelter to pay about five times the average spot power price and could result in reduced production if it continues.
NZ Aluminium Smelters acting general manager Stewart Hamilton said the smelter was watching the spot prices as the cost of electricity continued to climb while lake levels dropped because of a lack of rain in the south.
The smelter was paying about $120 to $130/megawatt on the spot market, or wholesale market, in the past week, he said, about five times the average spot price of $24/MW for the same week during the past five years.
Most of the smelter's electricity use was supplied by contract, but the remainder was bought on the spot market and because of the increase in price during the dry spell the smelter had already cut its electricity usage, Mr Hamilton said.
Mr Hamilton said he could not say what per cent of electricity was supplied by contract, but The Southland Times reported last year the smelter had a long-term contract with Meridian Energy, which covered about 90 per cent of the electricity, leaving about 10 per cent for the spot market.
No pots had been shut down yet, but if the spot price continued to climb, some could be, he said.
"The spot prices have increased quite significantly this week. We are watching, assessing our options day to day."
In 2010 the Tiwai smelter cut production by 5 per cent for a month from mid-December at a cost thought to be about $1 million a week after spot prices soared about 150 per cent.
In recent times the smelter had shut down about 25 per cent of its productions because of the cost of power, but Mr Hamilton did not expect that would happen this year.
"We are in the process of making some small changes and as each day progresses we will look at making further changes," he said.Meridian Energy spokeswoman Michelle Brooker said the heavy rain in the south yesterday had stopped the level of lakes used to make electricity from falling, but more was needed to increase the level.
"It will make a little difference, but after a day's generation it is gone again," she said.
The Tiwai smelter is the single largest user of electricity in New Zealand, consuming 15 per cent of generated electricity.
NZ Aluminium Smelters acting general manager Stewart Hamilton said the smelter was watching the spot prices as the cost of electricity continued to climb while lake levels dropped because of a lack of rain in the south.
The smelter was paying about $120 to $130/megawatt on the spot market, or wholesale market, in the past week, he said, about five times the average spot price of $24/MW for the same week during the past five years.
Most of the smelter's electricity use was supplied by contract, but the remainder was bought on the spot market and because of the increase in price during the dry spell the smelter had already cut its electricity usage, Mr Hamilton said.
Mr Hamilton said he could not say what per cent of electricity was supplied by contract, but The Southland Times reported last year the smelter had a long-term contract with Meridian Energy, which covered about 90 per cent of the electricity, leaving about 10 per cent for the spot market.
No pots had been shut down yet, but if the spot price continued to climb, some could be, he said.
"The spot prices have increased quite significantly this week. We are watching, assessing our options day to day."
In 2010 the Tiwai smelter cut production by 5 per cent for a month from mid-December at a cost thought to be about $1 million a week after spot prices soared about 150 per cent.
In recent times the smelter had shut down about 25 per cent of its productions because of the cost of power, but Mr Hamilton did not expect that would happen this year.
"We are in the process of making some small changes and as each day progresses we will look at making further changes," he said.Meridian Energy spokeswoman Michelle Brooker said the heavy rain in the south yesterday had stopped the level of lakes used to make electricity from falling, but more was needed to increase the level.
"It will make a little difference, but after a day's generation it is gone again," she said.
The Tiwai smelter is the single largest user of electricity in New Zealand, consuming 15 per cent of generated electricity.
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