The bombshell disclosure has the capacity to upset the government’s plans to partially privatise state-owned electricity company MightyRiverPower.
Since Tiwai Point consumes about a seventh of the power produced by the country and we are already awash with surplus power as National’s plans for significant economic growth seem to always never come to fruition (the reverse does seem to be their area of strength). Not having this contract does rather limit the returns that investors will be able to realize for quite some time from purchasing shares. Which will reduce the share price and the value to the taxpayers (already minimal to negative) from any sale.
Good strategy by the local smelter company and it’s main shareholder Rio Tinto and Sumitomo Chemical Company. Based on the Chicken Little approach to economic threats displayed by John Key, Steven Joyce, and Gerry Brownlee in the past, the pathetic bootlicking of Warner Bros executives over the Hobbit being a prime example, we can expect them to cave in and to shovel taxpayers dollars in their direction.
The timing makes this an all too familiar scenario for people interested in strategic leverage.
This morning’s announcement to the NZX comes ahead of a select committee appearance this morning by the chair and senior managers of Meridian at the commerce select committee, where it’s expected chief executive Mark Binns will outline more fully the implications of the stalemate.
But news that there may be no new electricity price agreement with New Zealand Aluminium Smelters carries huge implications for the electricity sector, which has struggled to grow in the last five years and would face a massive supply over-hang which could last years, were the smelter to close.
Coincidence. Yeah right… The only real question is in what manner this weak-kneed government will collapse.
Perhaps they should consider that this would be a good time to consider what alternative economic development could do with a surplus of electricity. Or just to look at shutting down some of the older power stations earlier. For instance Huntly power station which ..
The plant, as one of the biggest carbon dioxide greenhouse gas generators of the country, contributing over half of New Zealand’s emissions of greenhouse gases from electricity generation, has repeatedly drawn the ire of environmentalists and has been the focus of associated protests. A 2006 government report outlining future climate change mitigation and energy policies was seen by the operator as a sign that the plant might have to be closed by 2015 under these plans, with around 10 years of design life still remaining. It was also noted that, apart from being difficult to replace as a source of power (due to New Zealand’s annually growing generation demand, especially around Auckland), such a decision would also be uneconomical for the foreseeable future, even if coal prices were to rise.