The Major Electricity Users Group (MEUG) is up in arms about high electricity spot prices which it says will force exporters to make drastic cuts to production.Rio Tinto's Tiwai Aluminium Smelter today announced a 5% production cut, reported to resul
The Major Electricity Users Group (MEUG) is up in arms about high electricity spot prices which it says will force exporters to make drastic cuts to production.
Rio Tinto's Tiwai Aluminium Smelter today announced a 5% production cut, reported to result in a reduction of 30MW of power demand and a decrease of about 1500 tonnes of aluminium per month.
MEUG chairman Terrence Curie said in a release yesterday that other energy-intensive companies have also cut production in response to high power prices.
“Since the 1st of December spot prices have more than trebled," Mr Curie said.
"These spot prices are indicative of a power supply crisis; although most lake levels are average and the only hydro lake in need of rain appears to be Lake Manapouri."
MEUG has calculated that the Tiwai smelter's production cut will cost the company over $1m per week in lost export earnings.
“This isn’t just a short term financial effect," MEUG executive director Ralph Matthies said in a further press release today.
"Manufacturers taking sales orders for the next few months will now be asking themselves if it will be worth it if these unexplained high prices continue."
Small power retailer Pulse Utilities is also concerned, today calling for an immediate investigation into what it described as a sign that the NZ electricity market "isn't working in its current format".
"Spot prices have risen from a daily average of above $140/MWh earlier last week to a high of almost $308/MWh in recent days," Pulse said in a notice to NZX.
The Electricity Authority, the new industry regulator set up to replace the Electricity Commission, confirmed last Thursday that it is looking into increases in wholesale electricity prices since the end of November.
"The Authority has yet to form a view on currently high spot prices and is not undertaking a formal investigation at this point."
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