‘Smelters will not be subsidised’

Press, 3 February 1981, Page 6

‘Smelters will not be subsidised’

PA Wellington!: The aluminium smelted? l will not be subsidised by the other electricity consumers, said the Minister of Energy (Mr Birch) yesterday. ? : 1 “A study by the tricity Division shows it ; .will receive sufficient revenue from the new special ishifeiter loads to achieve atrate of return on its increased expenses which will be com> parable with the return it! has historically received on j: its normal expenditure,” Mr? Birch said. i “If the production of aluminium and the correspond-! ing generation of extra elec- j tricity is regarded as one] project, the return on the country’s funds allocated to this over-all project will be • about 10 per cent, made , up I of the selling price of elec-{ tricity to the new smelters l and non-eiectricity benefits to the nation’s .'economy, in-; eluding foreign exchange; earnings,” he said. 1 Several individuals . and L groups, including the Cam- i

paign Power; Poll group, had asserted that the electricity tariffs .would have •• to -"he raised;-considerably because the priced the smelters tyquld' pay for electricity was., too low. The "Electricity ..Division was asked;ito intake.; a very careful study of lil<ely future tariffs, ji/andtjteir investigations,;.' had;(’confirmed that the introduction bf ; the flew aluminium ' smelter’s would have no over-all effect on future bulk electricity tariffs. Mr Birch said. I The Electricity . Division [developed two feasible longiterm development ' power {plans covering 30 years with ■similar levels of supply security. One plan included [the extra smelters, and the •other represented a possible I future power system which ’could have been developed if ■the new smelters had not leen approved. v- ■- "It was fotr 1 that minor differences which “’’occurred |in the late 1930 s were reversed in the early 1990s'and' the final outcome was .that, I

over the whole period up to the year. 20,10, the...average .bulk; tariff'was -tlie same for]' the alternatives of supply dr not' supplying-the -new smel- ' ter,”-Mr Birch ‘saiM ? f “In .any, .case "the differs ence at no’time exceeded 2 per’ cent', which is less than the likely movements ir£ bulk tariffs front’ factors ,other' than smelter;; ; 'consid.eratihhsifefr' ■ . . F analysis? it was necessary to make assumptions, including estimates of possible future inflation and rates of interest which the- ElectricityigDivision might.yhaye to . pay/-on its borrowed- funds: ' “Because of The uncertain-' :ty in these, .. a; number';; of studies tygrevniade coveringseveral patterns of_ inflation;, and interest rates. ? All-.these; confirmed ; that Ithe'.-.additiorii of the third potline at Tiwai and the new smelter at Aramoana would have no overall effect electricitytariff regardless of the levels of-future' inflation' assumed,’A.• Mf Birch said. v l'