Rio Tinto Recommends Asset Swaps Among New Zealand Generators
By Gavin Evans, Tuesday 22 Sept 2009
bloomberg.com
Rio Tinto Alcan, New Zealand’s biggest power user, has recommended that the government consider swapping assets among state-owned generators to increase competition and provide more secure year-round supplies.
Swapping some of Meridian Energy Ltd.’s dams on the Waitaki River with Genesis Power Ltd.’s gas-fired plants would improve each company’s geographic spread and provide better incentives to manage the risk of low rainfall, Rio’s New Zealand unit said in a submission. Meridian’s contract to supply Rio’s Tiwai Point aluminum smelter would not have to be transferred, it said.
New Zealand’s government is considering measures to stem a 79 percent increase in household power costs since 2000. Wholesale prices reached a record in June last year, the third time in eight years that consumers were asked to reduce consumption because of low water levels in lakes that usually generate about 60 percent of the nation’s electricity.
Rio Tinto “is open to discussions with the government on a further asset split in the South Island,” New Zealand Director Paul Hemburrow said in the company’s submission.
The 350,000 metric ton-a-year Tiwai Point smelter is 79 percent-owned by Rio Tinto and uses almost 15 percent of the country’s electricity. It is supplied by Meridian Energy, with most of its power coming from the company’s 850 megawatt power station at Manapouri.
Energy Minister Gerry Brownlee last month dismissed two asset-swap proposals among state-owned generators recommended by a review panel and said the government would need to be convinced of the merits of a third.
Security of Supply
None of the three options considered by the government would increase competition on the South Island and may actually reduce security of supply, Rio said.
It advocated transferring Meridian’s Benmore, Aviemore and Waitaki power stations in exchange for two gas-fired generators Genesis runs at its Huntly site on the North Island.
Leaving Meridian with the Manapouri, Tekapo and Ohau power stations would give it sufficient capacity to retail energy on the South Island and still meet its obligations to the smelter contract, Rio said. Each of the companies would also have an incentive to contract or build new plants to meet peak demand.
The government’s diesel-fired emergency generator at Whirinaki should also be sold or transferred to one of the state-owned power companies, it said.
Wednesday, September 23, 2009
Rio Tinto Recommends Asset Swaps
Labels:
Genesis,
Meridian,
Rio Tinto,
Transpower
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