Meridian, NZAS settle multi-million dollar outage dispute
Meridian Energy and New Zealand Aluminium Smelters (NZAS) – 79% owned by Rio Tinto - have shaken hands on a power bill dispute reportedly worth tens of millions of dollars.
NZAS has a low cost ‘take or pay' supply contract with Meridian for its Tiwai Point smelter. A transformer failure caused an outage in November 2008 that cut production – and power use – from the smelter for several months.
The two parties disputed liability for the outage, with Meridian attempting to enforce the take or pay obligation and NZAS pushing its ‘force majeure’ clause for large and unforeseeable events to avoid payment.
After prolonged arbitration, Meridian announced today that the two parties have settled liability for the outage. The details of the settlement are confidential.
National grid operator Transpower had backed up Meridian’s view that the outage was not a ‘force majeure’ event. According to its latest annual report, it may be required to repay about $13m of transmission charges to Meridian if the ‘force majeure’ is accepted.
The Tiwai Point smelter is New Zealand's single largest power user.