Shadbolt pushing power use debate

Tim Shadbolt
Tim Shadbolt
The Invercargill City Council and Venture Southland will invest heavily to generate a public debate on electricity use in New Zealand, if Invercargill Mayor Tim Shadbolt has his way.

The two organisations believe the country's electricity supply is being mismanaged and are out to correct what they see as misinformation on the benefits of closing the Tiwai Aluminium Smelter.

The Southland councils are looking at buying full page newspaper advertisements in the country's major newspapers to put forward their point of view.

"What we really need is to look at this whole issue, not just the electricity costs for the smelter but just looking at electricity costs throughout New Zealand," said Mr Shadbolt.

"The big question to answer is why, in a country with such abundant resources for generating power, the price of electricity - according to one estimate - has actually doubled since 1986."

Venture Southland is a joint initiative of the Invercargill City, Southland District and Gore District Councils, and is the agency responsible for the region's economic and community development initiatives.

Stephen Canny, group manager for enterprises and strategic project, said there is no substitute demand for the 15 per cent of electricity which would be freed up were the Smelter to close.

"There will be no cheaper power - it just won't happen. New Zealand Aluminium Smelters (which owns Tiwai) already contributes $50 million toward transmission costs annually. If they leave New Zealand those transmission costs don't go away. So the consumer will have to pay them.

"But to get the power north would be a considerable additional capital cost. And worst of all, as consumers - including our large industrial users - have to pay more for more, they become less competitive globally."

Mr Shadbolt believes the Government has not negotiated in good faith with the owner of the Aluminium Smelter, Rio Tinto, over the price of electricity for the facility.

"The Government is playing this game where they claim an offer of bridging the gap, effectively a subsidy on the electricity price, was made the other day. In fact, the Prime Minister rang up Rio Tinto - there was nothing in writing - and gave them eight hours to make up their mind.

"You can't do that with a big company, because they had to go to Japan and consult over there and that was never going to happen - culturally speaking.

"So then they said Tiwai Point walked away from the negotiations; all Tiwai Point said was 'look we cannot possibly meet that timeline, we're interested in any sort of deal'.

"The Government seems to have been merely going through the motions and the Opposition hasn't been much better.

"They are saying its all about the asset sales and Tiwai are trying to exploit the best price they can. (They're asking) do we have to have this smelter, could closing it achieve a lower price for electricity, and do you think it might work to our advantage somehow."

But Mr Shadbolt said the facts had to be provided, for example the transmission costs involved in getting the power to consumers in the north.

He wants his council to bring in international experts to pin down the true benefits, if any, of closing the smelter.

"Also, though we're not against the asset sales per se, we can't see how selling off 49 per cent of power companies will drop the price of electricity. The mum and dad investors keeping hearing about are going to want a return on their investments, so that actually means the price of electricity will rise."

As a young man, Mr Shadbolt worked on the tunnels supplying the Manapouri Underground Power Station, located deep beneath Fiordland.

Its owner, Rio Tinto had bought into Alcan at a time when aluminium was $3000 a tonne and a year later, because of the global recession and China investing heavily into aluminium Smelters, it dropped to $1500 a tonne.

"I never thought I'd end up taking the part of a multi-national against the New Zealand Government, but I cannot see how Tiwai can remain competitive, currently losing $50m a year, "while the electricity company which owns the power station is making $200 m a year in annual profits".

If they go ahead, the full page advertisements will explain the view of the Southland councils.

The smelter is more than 40 years old but it has been been recently upgraded, is superbly maintained and recognised worldwide as being highly efficient and innovative, they say.

"It's almost a boutique operation, producing the purest aluminium in the world, which is used to manufacture alloys used in the likes of computers, telephones and aircraft wings," says Mr Shadbolt.

"It has an excellent safety record, is a first class corporate citizen here in Southland and - though innovation - achieves positive outcomes in the manufacture of aluminium not attempted anywhere else in the world.

"It is not the outdated 'sunset' operation being portrayed by the Government and the Opposition and will thrive again, so long as a reasonable deal can be struck over electricity."

- Paul Charman

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