Smelter would pay ‘full share’ for power

Press, 8 May 1980, Page 20

Smelter would pay ‘full share’ for power

A second aluminium smelter in the South Island, would be “paying its full share for power in the long term,” according to the Minister of Energy (Mr Birch)., Mr Birch was commenting on questions raised in an article by Dr N. J. Peet, senior lecturer in chemical engineering at the University of Canterbury. ■ ' Mr Birch said the Government had made no commitment on a second aluminium smelter and, indeed, had a first offering hydrqelectric, surplus to New Zealand-based industry.

"We haveyet to decide whether we want a full smelter as well,” he said. In its discussions, the Government was very much aware - that any,’ large scale venture toj , use; generating surplus “must' be economic in the long term.” “There is -no point in short-term benefits and longterm- penalties,” he said ■‘We will -make sure the industry is,:’paying the bulk tariff by the time the surplus is used’up..

The South Island industrial rate of the. bulk tariff, less 25 per cent, was the starting

point in negotiations on a power price to be paid by any prospective large-scale user of New Zealand’s surplus electricity in the South Island. The Government was also considering ways of

indexing power prices to inflation. Asked if the domestic user and taxpayer would beat costs if a large-scale venture was not charged to..'covet •real costs, of. generation - and

distribution, Mr Birch said any attempt to fully use excess generating capacity reduced costs to all consumers. "The generating capacity is there: the distribution is there. It must not lie idle. One additional user, whatevei he pays, reduces the cost borne by other consumers." Mr Birch said the Government had already moved some way towards Dr Peet’s suggestion of funding power station development out of a new vote. The 25 per cent electricity concession to South Island

industry’ came out of the Trade and Industry Vote and was marked as a regional development incentive. It mattered little what vote the money came from, Mr Birch said, provided that nationally New Zealanders benefited. “The Government recognises that surplus generating capacity exists in the South Island: it is not prepared to do nothing about it. It is creating a climate to attract investment that will use it at good rates of return,” he said. _ .

Yesterday Dr N. J. Peet, a senior lecturer in chemical engineering at the University of Canterbury, questioned assumptions underlying the Government’s plans to use surplus electricity in the South Island. Two Ministers concerned have replied to Dr Peet. Here they discuss the proposals for a second aluminium smelter.