Category: Electricity Energy and Utilities / Industry / Business, Economics and Finance / State Parliament / Government and Politics

Queensland smelter 'to lose jobs' after 500pc power price spike

Thursday, 19 Jan 2017 14:21:47

Australia's largest aluminium smelter says it will cut jobs and production because of massive electricity price hikes, but the Queensland Government-owned power generator blames the company for failing to sign a better contract.

Boyne Smelters general manager Joe Rae said production at the central Queensland plant would be reduced by 8 per cent and they will decide in the coming weeks how many of its 1,000 workers will go.

He said the smelters, in Gladstone, get the majority of their electricity from the local power station and the remaining 15 per cent comes from the Queensland grid.

The grid's wholesale electricity price spiked at $12,641 per megawatt hour for a short time on the weekend, well above the $140 MWh average.

Mr Rae said the surge occurred despite significantly more electricity generating capacity being available in Queensland.

"We have seen one of the Queensland generators holding 40 per cent of their capacity to a price that is up to 500 times the cost of generation," Mr Rae said.

"We've been curtailing electricity load to avoid those extraordinary costs, but due to sustained periods of time where a generator has come out of the electricity generating market, it has actually spiked up those prices longer than we have seen previously.

"That's sad because Australian jobs are at risk."

State 'not subsidising multinational company'

State Government-owned power generator Stanwell said the current volatility in the wholesale prices should come as no surprise due to increased demand in summer.

Chief executive Richard Van Breda said it had offered Boyne Smelters competitively priced 12-month fixed contracts since 2015, to remove exposure to the volatility of spot electricity prices, but they were knocked back.

"[They said the] prices offered by Stanwell are uncommercial given current aluminium market trading conditions," Mr Van Breda said.

"The contract prices offered are now at a significant discount to the spot market.

"Stanwell will not offer uncommercial contracts which would effectively see Stanwell and its owners, the people of Queensland, subsidising the operations of a multinational company."

Mr Rae said the fixed priced contracts they were offered were still too high.

"The truth of the matter is, the 12-month contracts we were offered — the cost of generation was globally uncompetitive and lock us into uneconomic production."



 

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