Aerials of Boyne Smelter Limited (BSL) from early 2013, company preferred images. Photo Contributed
Aerials of Boyne Smelter Limited (BSL) from early 2013, company preferred images. Photo Contributed Contributed

BSL, Yarwun, QAL owner lashes out against power prices

A LACK of competition in the electricity market is forcing businesses to lock in "uncompetitive contracts" or cut production, according to Rio Tinto.

Writing to the Australian Competition and Consumer Commission, aluminium managing director Bruce Cox recommended stricter regulations around ownership and competition in the National Electricity Market.

His comments echoed concerns made by Boyne Smelter Limited general manager Joe Rea, who said in January that electricity generators were manipulating the spot market by holding back electricity.

"The bidding behaviours of generators are contributing to unnecessary volatility in the market, most recently through the decision to move up to 40% of their capacity to more than 500 times the cost of their generation," he said.

The Rio Tinto-owned aluminium producer cut production by 14% in March, blaming the "volatile" spot market.

Now BSL uses 820MW of power, mostly sourced from Gladstone Power Station, below cost price.

Mr Cox said the NEM was "not the competitive market it should be".

He said businesses were forced to "lock in uncompetitive contracts" or "remain exposed to the volatile wholesale spot market".

"... Which may require shedding load and most seriously, urgent production curtailment and job losses," he wrote.

Rio Tinto, part-owner of QAL, owner of the Yarwun alumina refinery and BSL, made the recommendations in a submission to the ACCC's inquiry into electricity supply and prices.

Mr Cox said the current framework was unable to curb exercises of market power, with two companies (state-owned Stanwell and CS Energy) accounting for more than two-thirds of Queensland's power supply.

He supported tougher restrictions on power generators imposed by the Australian Electricity Regulator, and said the AER should be given the power to "intervene in any behaviour that threatens or may threaten the integrity of the wholesale market".

RUSAL said to the Alan Finkel review earlier this year that QAL, of which it is a part-owner, had its power bill increase by 90% in 10years, despite their energy use was unchanged.



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