Corp. to negotiate with Comalco

Press, 12 May 1987, Page 8

Corp. to negotiate with Comalco

By

BRENDON BURNS

in Wellington

The new Electricity Corporation will negotiate direct with Comalco about the Tiwai Point smelter’s power price, in an attempt to find settlement of the long-running dispute. The Prime Minister, Mr Lange, said yesterday that this was the appropriate course of action.

The Cabinet was yesterday due to confirm this step, but fog at Auckland Airport meant the Minister of Energy, Mr Tizard, could not attend. V

However, Mr Lange revealed the Government’s intentions at his post-

Cabinet news conference. He said the options were to legislate the neardoubling of electricity price? sought for the Bluff smelter, to negotiate, or to surrender. The Prime Minister indicated the Government’s reluctance to legislate.

“I. think there are powerful arguments in that there is a long-term contractural commitment to supply power at a formula which was deter-

mined contracturally.” That fact had to be heeded, he said. But the Government also had to take notice of taxpayers’ interests if a long-term contract was. not morally sustainable. This refers to the fact that Comalco gets its power at about half the rate paid by other main users of electricity. Until now, Government officials from Energy and Treasury have led discussions with Comalco in seeking a price rise. But from April 1, Electricorp became respons-

ible for supplying the smelter. Mr Lange said it was sensible to hand over negotiations to the new corporation and allow them to do the deal. But he agreed the contractural agreements on electricity prices had to be transferred, or changed only by mutual consent. , Previously, the Government has suggested it would subsidise the difference between *the commercial price Electricorp would want — Comalco is obliged t| pay.

That proposal is not favoured by either the corporation or Comalco.

The Prime Minister also agreed that any deal reached on power prices would have to be taken into account in the transfer of assets to Electricorp. Negotiations with the Treasury on this issue are continuing, six weeks after the April 1 deadline set for completion. It was clear yesterday that the dispute over Comalco’s power price, which has already dragged on for 18 months, will not be solved quickly. |