a
Book Now
M

Tiwai renewal for greater flexibility and market stability

by | Aug 3, 2015 | Energy

The news announced this morning ends the worst kept secret of the electricity industry in New Zealand. Months of speculation has been concluded with this morning’s announcement that NZAS will continue to operate Tiwai Point with extra hedge contracts being provided by Contact Energy and Genesis Energy. The deal will provide NZAS with greater certainty if Meridain’s hydro lake storage drops to low levels during summer periods in the future. This will no doubt have a flow on effect to the commercial market as there is now certainty regarding the future of Manpouri and the ongoing viability of thermal plants such as Contact’s Otahuhu B and Genesis’ Huntly power stations.

tiwai

 

Energy News has posted the following:

New Zealand Aluminium Smelters has opted to retain its contracted supply cover with Meridian Energy.

A variation to the agreement between the two companies commits Meridian to cover the full 572 MW currently used at the smelter from January 1, 2017. The new deal will see that cover provided at more competitive rates for the smelter than would have applied if NZAS chose to rely on the previous arrangement.

“This variation will give the smelter the flexibility to operate at current production levels for the full contract period should it want to and provide Meridian with an improved overall price for its electricity,” chief executive Mark Binns says.

The Tiwai Point smelter at Bluff is the country’s biggest electricity consumer. The site can use up to 630 MW of power but has been running only three of its four pot lines since early 2012 when record-low South Island hydro storage sent wholesale prices soaring.

Tiwai is currently using about 572 MW annually, fully-hedged under a new lower-priced deal it agreed with Meridian in August 2013.

But that deal, signed in the lead-up to Meridian’s listing, required the smelter to reduce its cover to 400 MW from January 2017 or have its entire supply return to the higher electricity prices set in a new contract settled in 2007.

Contact

Under the deal announced today, the price on that supply will increase. Meridian describes it as a “blend” of the agreed post-2017 price on 400 MW of load and a more market-related price for the balance. Prices also increase if the New Zealand dollar value of global aluminium prices rise above certain levels.

Today’s deal will also see Contact Energy provide Meridian with a financial contract for 80 MW of supply to help guarantee its hedged position.

The Contact deal will apply for at least four years and a maximum of 14 years commencing from January 2017. It also includes provision of associated risk management from Meridian to Contact under certain limited circumstances.

Genesis Energy has also agreed to provide Meridian with 50 MW of financial cover from Huntly for two years starting in 2017.

Meridian is committed to cover Tiwai Point’s electricity usage at current production levels through to 2030, but NZAS retains all its termination rights from the 2013 round of negotiations, which includes a 12-month notice of termination that can be given any time from January 1, 2017.

New Zealand Aluminium Smelters has said it wants to keep operating here and has been sounding out other generators about providing a hedge over the other 172 MW of supply. It previously negotiated an additional summer supply from Meridian but was unable to utilise that due to the impact on the smelter’s transmission bill.

Predictions

More than 60 per cent of participants in an Energy News poll had expected the smelter to keep operating at 572 MW. Just 13 per cent thought the smelter would close in 2017; 25 per cent thought NZAS would drop its load to 400 MW.

Twenty-two per cent of participants thought a deal would be announced with Contact and Genesis – the two companies most exposed to lower wholesale prices if the smelter was to reduce its demand.

On the plus side for the smelter, the weaker New Zealand dollar is offsetting much of the recent price weakness. Longer term, changes to transmission pricing proposed by the Electricity Authority should also deliver big savings for the site.

 

(more…)

Energy Efficiency and Energy Management Methodologies Generate up to 40% Reductions

by | May 19, 2015 | Energy

Total Utilities provides an end to end approach to utility optimisation by focusing on the key business drivers such as controlling cost and consumption. Typically we find that businesses can overlook the strong relationship that exists between purchasing prices, consumption and the efficiency and effectiveness of utilisation.

Effective Graph

Through tailored services that can help any business assess, improve and manage on site levels of energy efficiency, with the use of innovative energy efficiency and energy management methodologies businesses will be able to generate up to a 40% reduction in total energy usage, which directly correlates to significant cost savings, increasing the sustainability of your business. (more…)

Drought threat creates demand for alternative energy sources

by | Jan 15, 2015 | Energy

 

benmore_dam_1 (3)

Geothermal generation supplied nearly 20% of New Zealand’s total electricity last week – a substantial rise from the average 7% contribution from this energy source. The spike in demand was due to lower than average output from thermal and hydro generation, caused by power station outages in December and low inflow levels in the country’s hydro lakes.

Thermal-based generation outages kept pricing elevated throughout December and Contact’s Otahuhu B plant in Auckland remains out due to on-going maintenance. National water storage in hydro lakes has continued to fall around 7% below average for this time of year. Latest NIWA forecasts predict less than a 50% chance of rainfall hitting normal levels in the South Island between January and March. This could be compounded by above-normal temperatures in the west of the South Island over the same period with a 35-40% chance of average temperatures in all other Southern regions.
The country’s biggest hydro generator, Meridian, is reported as being “comfortable with the current situation.” Meridian’s operating report for December shows its inflows last month were 81 per cent of average. (more…)

Managing, Monitoring and Mitigating Risk

by | Sep 5, 2014 | Energy

Price is not king when it comes to managing utilities and getting the best from your investment. Businesses typically overlook the strong relationship between purchasing prices, consumption and utilisation efficiency. Focusing on cost per unit without analysing the way in which utilities are consumed can result in businesses paying more and getting less value.

Total Utilities provides an end-to-end approach to utility optimisation across electricity, natural gas/LPG, trade waste and ICT. This starts with strategic, proactive purchasing but it doesn’t end there. We focus on key business drivers like controlling cost and consumption – and report back on usage trends, exceptions and changes, provide budgeting advice for the future and remove the need for manual bill-checking. These deliverables should be underpinned by a proactive energy audit of any new premises to ensure that these meet best practise from day one.

Monitoring Image Business Drivers

(more…)

Don’t blame the market for hikes

by | Sep 1, 2014 | Energy

SundayStarTimes-310814-TUMG

Electricity price rises are coming from the regulated parts of the industry, writes Chris Hargreaves in the Sunday Star Times 31 August 2014.

Rod Oram’s recent comments in the Sunday Star Times and on National Radio were critical of the current market prices for retail energy and the way in which increased profits were distributed to shareholders by generators and retailers – rather than being used to bring retail pricing down.

While Rod’s comments bear thinking about, his analysis failed to take into account market changes over the past few years – and the considerable impact of key pricing factors such as transmission and distribution charges (both of which are regulated and out of the control of retail providers).

Rod Oram also appears unaware of the significant reductions in energy prices that have benefitted commercial users of electricity in the past. Total Utilities Management Group has seen reductions averaging 20% on recent contracts since the last quarter of 2012 as both generators and retailers have rebalanced their regional and commercial portfolios in response to changes in generation capacity, lower demand and increased regional competition.

Electricity pricing in New Zealand is far from transparent. This leads to uncertainty around how invoiced prices are derived and means that changes to the various cost elements can be difficult to police. This uncertainty can muddy the water when talking about the historical cost of contestable energy prices.

The Electricity Authority recently released a Statistics New Zealand survey covering historical retail residential pricing with figures backed up by the MBIE. (more…)