Karioi mill wants cheaper electricity

Waimarino Bulletin, Volume 3, Issue 22, 22 October 1985, Page 1

Karioi mill wants cheaper electricity

Winstone Samsung Industries Ltd, which is working hard to maintain its place in the world pulp market, is trying to get cheaper electricity. General manager Klas Kronquist said that the mill, which exported all its production, was under great pressure from increased costs and was seeking cheaper power price from the King Country Electric Power Board. The mill is the board's biggest consumer taking two-thirds of total supply.

"All our costs have increased over the past months — export incentives have been taken away, electricity has been increased twice — by 21 per cent and 27 per cent, transport prices, both road and rail, have gone up, while at the same time the world pulp price has been down for a year, and with the change of 27 or 28 per cent in the value of New Zealand currency, things are enofmously hard for us." The power board and the company are negotiating on

the power price, which had been brought into question by the Minister of Finance in his June Budget Statement in a section on public sector efficiency. The statement suggested that some large industrial consumers were paying an unreasonable mark-up on the cost of bulk electricity supply, and should be permitted to negotiate a better price, or be given the option of getting direct supply from the Ministry of Energy, thus circumventing power boards. Mr Kronquist said that the KCEPB's only contribution was in maintenance and administration associated with the cable lines from the Tangiwai sub-station, and this meant Winstone Samsung was subsidising other board consumers. M r Sanders, general manager for the power board, said that in fact the price charged to the mill was "close to cost." "The bulk supply of electricity has increased 146 per cent since the mill started up — we haven't done that but we have to pass it on," he said. "We are very sympathetic with the mill but we cannot carry those cost increases otherwise other consumers will be subsidising the mill. The Ministry speaks as a supplier and a regulator which is difficult for us." Asked how much extra consumers would pay should Continued on page 5

Karioi mj|l electricity

Continued from page 1 Winstone Samsung get direct supply from the Ministry of Energy, Mr Sanders said the average cost per consumer would increase by $30 per annum. Accordingto Mr Hewlett, commercial engineer with the Ministry's Electricity Division, the Minister of Energy did not want to take profitable companies away from power boards, but was offering direct' supply to encourage power boards to set realistic prices. Mr Hewlett pointed out that whether the cost to large companies was brought down, or whether they obtained direct supply from the Ministry, the cost to individual consumers would still increase. In the meantime the KCEPB and Winstone Samsung are negotiating the power price between themselves and with the Ministry of Energy. Mr Kronquist said that all exporting companies were fighting for their survival now, but if the company could reduce costs, there would be a good future. He said he was impressed with hard work and responsible behaviour shown by the mill staff.