In an environment where an electricity price rise of one cent per kilowatt hour could cost it $2.3 million a year, the Northland oil refinery has been reeling at the effect of 10c increases.
Power price "spikes" caused by Maui gasfield outages could cost the refinery millions of dollars.
Disruptions to the
supply from the Maui gasfield have caused electricity prices to increase by up to 10 times their normal level recently.
The price spikes had led some major power users around the country to cut back on energy usage, but that was not possible for the Marsden Pt Oil Refinery, chief executive Thomas Zingerley said.
At Otahuhu power station earlier this month, power prices peaked at $525 a megawatt hour, while at Haywards -- the main North Island reference point -- the price spiked at $450/MWh.
In the South Island, Benmore peaked at $380/MWh. Average power prices normally hover between $45 and $50/MWh.
The refinery used about 230 million kilowatt hours of electricity a year and every one cent price rise per KWh could cost the refinery $2.3 million a year, Mr Zingerley said.
"We have seen some price spikes... where it went up by 10 cents (per KWh)," he said.
"But there's very little we can do about it at this stage."
Energy experts are predicting more price spikes as the Maui gasfield runs out over the next decade.
That scenario, and the need for more power for a possible upgrade of the refinery to produce diesel to new environmental standards, has led New Zealand Refining to look at generating its own power.
Mr Zingerley would not say at this stage what form that "on-site" generation would take, but did say that the company was looking at a co-generation option with other companies.
However, the nearby Marsden B power station is not an option as the oil-fired 250MW station has been mothballed since it was built in 1979. Much of the station's plant has been dismantled and part of the site leased to other ventures.
To combat the price spikes the refinery was also shifting some of its daytime operations to night, when electricity is cheaper.
This would not require extra night shifts, Mr Zingerley said, as the refinery had enough staff on duty to cope with changing the operations from day to night.
The two main price spike times were morning and evening when people used most electricity, Mr Zingerley said. The price spikes are another potential blow to the refinery after it was announced last year that imposing a carbon tax on the operation could close it down.
The refinery is also facing costs up to $150 million to comply with new clean fuel regulations which require lower levels of sulphur and benzene in fuels.
Shareholders have approved planning and preparations for the new equipment and will decide if it goes ahead in April.
New Zealand Refining shares, which have traded between $15.30 and $18.65 in the last year, last traded at $16.30.
- NORTHERN ADVOCATE (WHANGAREI)
In an environment where an electricity price rise of one cent per kilowatt hour could cost it $2.3 million a year, the Northland oil refinery has been reeling at the effect of 10c increases.
Power price "spikes" caused by Maui gasfield outages could cost the refinery millions of dollars.
Disruptions to the
AdvertisementAdvertise with NZME.