Binns hopes Tiwai smelter will stay, 'but not at any cost' 28 Oct 2016
Related articles
- NZ consumers grow more upbeat, may resume spending Business
- Knowles quits as CEO of KiwiBank Business
- NZ migration bolstered by British invasion Migration
- NZ manufacturing activity reaches highest since 04 Business
- NZ dollar hits 22-month high vs euro Business
- OceanaGold finds new gold deposits at Fraser mine Business
- Transpower gets go-ahead for $170m SI upgrade Business
- NZ home sales creep up in March, still subdued Property
- NZ economy expands at fastest pace in two years Business
- New Zealand food prices fall in February Business
Friday 28 October 2016 11:18 AM
Meridian CEO Mark Binns hopes Tiwai smelter will stay, 'but not at any cost'
By Fiona Rotherham
Oct. 28 (BusinessDesk) - Meridian chief executive Mark Binns says the South Island electricity generator and retailer wants to see the Tiwai Point aluminium smelter stay, “but not at any cost”.
At today’s annual general meeting in Christchurch, Binns told shareholders that he had recently returned from seeing investors in the UK and US where the smelter is always the first issue for discussion.
That was “not surprising, given the smelter uses 12 percent of New Zealand’s electricity and its future has implications for the whole sector,” he said.
From Jan. 1 next year, Meridian gets a price increase under the refreshed contract it negotiated last year with the smelter’s owners, New Zealand Aluminium Smelters which is majority-owned by Rio Tinto. The deal was a blend of the old price for 400 megawatts of supply and 172MW at a higher price.
The contract still runs to 2030 but the owners have an annual option to close or partially close the facility with Jan. 1 being the first date it can make that decision. They also gained a right to cut the smelter's electricity demand to 400MW from April 30 with one year’s notice.
Binns said investors’ views on the smelter vary. Some investors are concerned, though these tend to be those who have not invested in the sector but probably would if the smelter left and the uncertainty was removed, he said. Others think the smelter economics, although still difficult, don’t justify closure and its associated costs.
His own views haven’t changed. “I believe the smelter will stay for the foreseeable future and hope that they do so. However, the owners have to form their own views based on the reality of the world aluminium market and their view of the future,” he said.
“The only thing we can manage is the energy price, which even with the 1 January increase, will remain the cheapest electricity price to any New Zealand customer.”
If the smelter closed, the excess power in the lower South Island would flow north and the supply and demand side of the markets would need to adjust to the “new normal”, he said. On Meridian’s modelling, over a medium term horizon of five years, the company could be in an even stronger strategic position than it is today, he said, with the caveat that modelled outcomes are always dependent on assumptions and there will always be uncertainty.
Meridian was last year unable to convince any of its rival electricity suppliers to take up the slack on the Tiwai Point contract and remains the sole electricity supplier, although it achieved financial hedging contracts with other power companies.
Board chairman Chris Moller also praised the Electricity Authority’s proposals for transmission pricing which he called a “fairer and more durable option”.
The proposals, which the authority is now undertaking another round of submissions on, is “users’ pay, a concept introduced to New Zealand many decades ago,” Moller said. “Despite some misinformation in the public domain, the fact remains that households in most areas of New Zealand will see a decrease in their bills, “ he said.
However, the proposals have drawn widespread criticism and sparked a campaign led by major electricity users in the Upper North Island to overturn them. They would raise the price of electricity for Auckland, Northland and the South Island’s west coast by changing the way the national grid is paid for. The main beneficiaries of the long-debated reforms would be Meridian and other South Island electricity generators and the Bluff aluminium smelter.
The EA has delayed a final decision on the pricing methodology until mid-April. Moller said he hopes at their next annual meeting, they can outline a timeframe for implementing a resolution of the “long-standing issue”.
Changes in the supply-demand dynamics in the market with the retirement of around 800 megawatts of thermal generation capacity have spurred Meridian to revise its view on when new renewable generation will be required, with planning brought forward to potentially as soon as 2019.
“It’s our intention to be ready with the lowest cost renewable option when the market requires it,” Moller said.
Meridian’s directors also sought a near 12 percent increase in their fee pool to $1.1 million from $986,000 over two years.
The shares slipped 0.4 percent to $2.59, having gained 8.8 percent so far this year.
(BusinessDesk)
ends
News
Hilary Timmins' Award-Winning UK Documentary Series To Inspire NZ Students
29 Jun 2020 Education
Dream Catchers, produced and directed by Hilary Timmins, celebrates the success stories of more than thirty inspirational New... more
New Zealand reaffirms support for Flight MH17 judicial process
7 Mar 2020 News
Ahead of the start of the criminal trial in the Netherlands on 9 March, Foreign Minister Winston Peters has reaffirmed the need to... more
Business
NZ Government's Economic package to fight COVID-19
17 Mar 2020 Business News
The Coalition Government has launched the most significant peace-time economic plan in modern New Zealand history to cushion the... more
NZ Government announces aviation relief package
19 Mar 2020 Business News
Transport Minister Phil Twyford today outlined the first tranche of the $600 million aviation sector relief package announced earlier... more
Living
Diversity was Key at New Zealand Trade Tasting in London
6 Jun 2022 Food & Wine
New Zealand Winegrowers Annual Trade Tasting was recently held in London, on Wednesday 4 May, in Lindley Hall.
It was the first... more
Kiwi author stuns Behind the Butterfly Gate
12 Jan 2022 Arts
Hidden behind the Butterfly Gate is where the secret has been kept for 76 years...
New Zealand writer Merryn Corcoran’s... more
Property
Fairer rules for tenants and landlords
17 Nov 2019 Property
17 NOVEMBER 2019
The Government has delivered on its promise to the over one million New Zealanders who now rent to make it fairer... more
New Zealand Government will not implement a Capital Gains Tax
17 Apr 2019 Property
The Coalition Government will not proceed with the Tax Working Group’s recommendation for a capital gains tax, Jacinda Ardern... more
Migration
Boosting border security with electronic travel authority – now over 500,000 issued
19 Nov 2019 Migration
19 NOVEMBER 2019
We’ve improved border security with the NZeTA, New Zealand Electronic Travel Authority, which helps us to... more
Christchurch reinstated as refugee settlement location
18 Aug 2018 Migration
18 AUGUST 2018
HON IAIN LEES-GALLOWAY
The announcement that Christchurch can once again be a settlement location for refugees... more
Travel
Gallipoli Anzac Day services cancelled
19 Mar 2020 Travel & Tourism
The New Zealand and Australian Governments have announced this year’s joint Anzac Day services at Gallipoli will be cancelled... more
New Zealanders advised not to travel overseas
19 Mar 2020 Travel & Tourism
New Zealanders advised not to travel overseas
more
Sport
The Skipper's Diary: Sir Richard Hadlee honouring his father and NZ's Forty-Niners
27 Oct 2019 Cricket
NZNewsUK London Editor Charlotte Everett spoke to Sir Richard Hadlee about why he’s chosen to publish his father’s... more
PREVIEW: All Blacks v England semi-final
26 Oct 2019 Rugby
The two most convincing quarterfinals winners are set to square off in a semifinal showdown for the ages when the All Blacks meet old... more
Columns
Gordon Campbell on the Gareth Morgan crusade
11 Nov 2016 Opinion
Gordon Campbell on the Gareth Morgan crusade
First published on Werewolf
The ghastly likes of Marine Le Pen in France and Geert ... more
Gordon Campbell on the US election outcome
10 Nov 2016 Opinion
Column - Gordon Campbell
Gordon Campbell on the US election outcome
Well um.. on the bright side, there (probably)... more
Kiwi Success
Congratulations to Loder Cup winner
26 Sep 2018 People
25 SEPTEMBER 2018
The Loder Cup, one of New Zealand’s oldest conservation awards, has been awarded to Robert McGowan for 2018... more
Appointments to New Zealand National Commission for UNESCO
16 Aug 2018 Appointments
16 AUGUST 2018Appointments to New Zealand National Commission for UNESCO
HON JENNY SALESA
Associate Education Minister Jenny Salesa is... more
Recruitment
Historic pay equity settlement for education support workers
14 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more
Historic pay equity settlement for education support workers
22 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more