Second plant shuts as power cost rockets

By MICHAEL OTTO

A second North Island company was forced to shut down pulp production because of huge electricity price increases caused by the disruption to inter-island power transmission.

Winstone Pulp International's Karioi mill near Ohakune was forced to shut down production for eight hours on Friday as spot electricity prices soared from below $50 a megawatt-hour to over $800 MW/h, said managing director David Anderson.

The increase forced Pan Pac Forest Products to shut down its pulp manufacturing plant near Napier on Friday.

Power prices returned to near normal over the weekend, but they are expected to peak again today if repairs to the South Island transmission lines cannot be made in time.

"These prices are a huge hit for the productive sector," Mr Anderson said.

"[The shut downs] will mean a significant loss of production and export dollars.

"Electricity is now our single biggest cost.

"If prices remain at these levels then we will be forced to stay shut until they return to where they were," he said.

WPI employs 145 staff at the mill.

Three South Island transmission towers were blown over in high winds on Friday, knocking out the Cook Strait link.

Transpower, the owner and operator of the National Grid, advised business customers yesterday that a return to normal service was expected by late afternoon today, with a small chance of partial restoration before that.

Mr Anderson said several major North Island forestry companies and big power users were affected by the power price rise.

His company had contract cover to meet most of its power needs, but the scale of the price rise made it prohibitive to keep running and paying for the small proportion of power not covered by the contract.

The Energy Minister, Pete Hodgson, could not be reached for comment.

The power price rises will not affect domestic power consumers.