The Winstone mill has closed indefinitely.
Ruapehu Mayor Weston Kirton says regulation could be needed to save the Winstone Pulp Mill near Ohakune, which has closed due to soaring electricity prices.
The largest employer in the Ruapehu District closed indefinitely earlier this month with owners saying electricity prices rendered it uneconomic.
Kirton said the cost of electricity, “which has surged by 600 per cent” over the past couple of years, was jeopardising operations.
“In September 2021, a megawatt hour cost $100, it now stands at $700. Despite significant investments in new equipment and a 30 per cent reduction in electricity use to boost productivity, the Winstone mill is now up against the wall.’”
He said permanent closure of the mill – which employs almost 300 people – would be a devastating blow, not only to the local and regional economy but also to New Zealand’s already limited value-added manufacturing base.
But the plight of the Winstone mill was not unusual – industrial sites all over the country were now in jeopardy, he added.
“In a country where most of our electricity is produced from renewable resources, mainly rain, this situation is unacceptable and highlights systemic and policy failures.
Kirton supported Regional Development Minister Shane Jones’ call for a substantive inquiry into electricity pricing to push down prices.
“As Minister Jones pointed out, New Zealand has recently experienced the highest electricity costs in the western world, and we cannot allow our businesses to be destroyed by this.”
He called on the government to regulate the market, saying the importance of the Winstone mill to the central North Island was comparable that of Tiwai Aluminium smelter to Southland.”
Jones has accused New Zealand’s four big power companies of profiteering.
Those in electricity generation and retail – the so-called gentailers – are dominated by Meridian, Contact, Genesis and Mercury.
“There are provisions under the existing electricity legislation that enable the Crown to use a code of conduct which has legal force to change their behaviour,” he said.
“For a long time I’ve felt there were some significant deficiencies in the structural makeup of our wholesale energy market.”
Jones said the government was examining short-term measures to remedy failings in the rules and the regulations governing the energy market.
Victoria University economist Geoff Bertram supports Jones’ point of view.
“The market is doing exactly what it was set up to do, which is to get high prices and high profits at times of scarcity,” Bertram said.
“If it were a competitive market then you could run some economic theory to say well that might be OK, but it’s not a competitive market, this is a market where scarcity goes straight through to profiteering.”
