Tiwai Point closure: What it could do to power prices

Greenpeace says excess power could charge electric cars more cheaply. Photo / Alan Gibson

Electricity no longer used at the Tiwai Point aluminium smelter could power up to 776,000 households but it's uncertain what will happen to bills.

The smelter, which will close next year, uses up to 14 per cent of the country's generated power but transmitting that efficiently to the North Island will mean a costly upgrade of the National Grid over several years.

Consumer NZ says the increase of supply against now flat demand should ''all things being equal'' result in lower retail prices for consumers.

"However, as always in the electricity sector, nothing is simple. There are options open to the electricity industry that could see non-renewable generation reduced or switched off, accelerating decarbonisation, but reducing capacity gains," said the organisation's chief executive Jon Duffy.

Transmission costs are always a factor in New Zealand as generation is situated a long way from demand.

Transpower says it could cost up to $600 million to upgrade inter island links and the National Grid in the central North Island to get power to where it is in highest demand - the north of the country.

"We would expect Transpower to make that argument in a transparent manner to ensure it is justified and consumers do not unfairly miss out on the benefits of any potential decrease in the retail price of electricity," said Duffy.

While there would apparently be an excess of power, Contact has already warned it will look at closing one of its gas-fired power stations and until transmission capacity is improved will have to spill water from its dams into the Clutha River.

It also says a shovel ready geothermal power station at Tauhara may have to be deferred because of the impact of smelter owner Rio Tinto's ''disorderly exit'' on the electricity market.

Generation prices make up nearly a third of power bills while Transpower transmission is about 10 per cent.

Greenpeace says bills should fall because more power will enter the market.

Its executive director Russel Norman said it meant renewable energy that could be used for electric cars and industries.

"This will cut climate emissions out of the transport and industrial sectors, while simultaneously helping to reduce New Zealand's current account deficit by cutting the billions of dollars we spend on importing oil for the transport sector," Norman said.

Rio Tinto was blasted earlier this year by Environment Minister David Parker for failure to deal with its hazardous waste.

There were claims the company reneged on a verbal agreement given last week to remove the waste that has been stored in the Southland town of Mataura for the past six years.

In May, it was under investigation for destroying two sacred Aboriginal caves in Western Australia.

The Anglo-Australian conglomerate is the world's second-biggest miner behind BHP.