Transpower advises Tiwai Point Smelter to hold-up a year for discount, Rio Tinto voices its “urgent”

The Tiwai Point aluminium smelter with 800 employees near Bluff in New Zealand might have to hold up for a year to find out whether their jobs are safeguarded as the combat over its power bill continues.

The Electricity Authority of New Zealand last week covered the way for the smelter to apply for a discount potentially worth $10 million a year on the transmission charges it pays Transpower to connect to the national grid.

However, Transpower declared on 17^th June’20 that it might be at least a year before it is ready to consider any application.

Transpower said: “Any discounts on transmission charges would need to wait on other decisions Transpower needs to make about how to implement a broader instruction issued by the authority for it to adopt more of a user-pays model for maintaining and upgrading the grid.”

Deborah Gray, Transpower spokeswoman said: “The next step for Transpower would be to thoroughly review the requirements issued by the Electricity Authority".

"This will include how we will meet the requirements of the prudent discount policy.”

"However, we agree with the authority that splitting off the prudent discount policy and addressing it early would risk delaying the development of the transmission pricing methodology as a whole," she said.

"Transpower is required to deliver a proposal to the authority by the end of June 2021 for its consideration,” she said.

A spokeswoman for Tiwai Point smelter's majority owner, Rio Tinto, appeared to cast doubt on whether it was prepared to wait that long.

“For over a decade, New Zealand Aluminium Smelter has been overcharged for transmission infrastructure it does not use. This has undermined its competitive position in comparison to other aluminium smelters globally," she said.

"New Zealand will not be able to continue producing low carbon aluminium for domestic and export markets if this fundamental issue cannot be addressed urgently.”

Smelter chief executive Stew Hamilton warned last week that the authority's changed guidelines on prudent discounts did not appear to provide any relief for the smelter "in the short term" because Transpower had yet to develop the detailed rules.

Rio Tinto had signalled it would decide on the future of the smelter by the end of March this year, which could see it, fully or partially close.

However, it has not since provided a revised date for the completion of its review or even confirmed whether it is still ongoing.

In addition to lobbying for a reduction in its transmission bill, the smelter has been attempting to negotiate a one-third reduction in the price it pays Meridian and Contact Energy for power.