Minister denies hand in Tiwai deal

Energy Minister Megan Woods has denied intervening to help the Tiwai Point aluminium smelter get a better deal on power, despite offering the smelter’s majority owner, Rio Tinto, help from her officials at meetings with national grid operator Transpower.

Rio Tinto is due to make a decision by the end of the month on whether to partially or fully close the smelter, which employs 805 staff members.

The Electricity Authority last month began consulting on an important rule change that could allow the smelter’s operator, New Zealand Aluminium Smelters (NZAS), to get a ‘‘prudent discount’’ on the $64 million annual fee it pays Transpower to carry electricity to the smelter from the Manapouri power station.

Woods had earlier emailed Alf Barrios, the chief executive of Rio Tinto’s aluminium business, saying such a discount was the only ‘‘feasible solution’’. She suggested an early approach to Transpower if Rio Tinto wanted to seek a discount, and said in the email that ‘‘my officials will be available, if needed, to assist in any meetings on this matter’’.

Despite that offer of assistance, Woods told Stuff on Monday that she had ‘‘repeatedly made it crystal clear to NZAS in several meetings that I will not be intervening on their behalf and the right course of action is to speak to the relevant authorities who are the decision makers’’.

Public submissions on the proposed rule change close today.

Transpower spokeswoman Deb Gray said it had already had talks with Rio Tinto and the smelter about what the change might mean. Transpower was party to a workshop on Thursday with representatives of Rio Tinto and the smelter, the Ministry of

Business, Innovation and Employment, the Electricity Authority, the Commerce Commission, the Treasury and other senior industry participants, Gray said.

‘‘The proposed prudent discount policy was discussed along with a range of other potential initiatives that would reduce the smelter’s overall energy cost.’’

The proposed rule change would allow power users such as the smelter to cap their transmission bill at the price they would need to pay to connect to power stations using their own dedicated transmission lines.

Asked whether Transpower felt under any pressure from

Woods to offer the smelter a discount, Gray said it had received ‘‘no indication or specific direction from any minister’’ on the smelter or transmission pricing.

‘‘The valuation process for assessing the ‘efficient standalone cost’ ... would be complex and open to multiple interpretations. We have not yet engaged with the smelter on its estimate of the standalone cost.’’

Gray said Transpower had advised the Electricity Authority that if the prudent discount policy change was made, then the authority should be the final arbiter of whether it could be applied ‘‘and to what amount’’.