The Tiwai Point electricity supply deal between operator New Zealand Aluminium Smelters and Meridian Energy has not prompted any rerating of the country's generating retailers by international rating agency Standard & Poor's.
While this week's variation agreement is between New Zealand Aluminium Smelters (NZAS) and Meridian Energy for the annual supply of 572MW of power, several companies are supplying 172MW of the total, including 80MW from Contact Energy.
Standard & Poor's (S&P) said in a market update yesterday the Tiwai electricity variation agreement, between Meridian and NZAS, had no rating impact on the rated integrated electricity players in the market.
''While the variation will see Meridian continue to supply 572MW of electricity to the smelter at competitive rates, it does not fundamentally change two key rights of NZAS under the contract,'' it said.
NZAS has a right to give 12 months' notice in April 2016 to reduce the electricity supply from 572MW to 400MW from April 2017, and then on a rolling 12 months.
It also has a right to terminate the full offtake by giving 12 months' notice from January 2017, with Tiwai closing a year later.
New Zealand's electricity market supply base would change in response to any reduction in demand by the smelter, and the 12 months' notice for any decline in demand ''should provide reasonable lead time'' for the market to adapt to the changes, S&P said.
