Tuesday 27 August 2008

Mr FINCH (Question) - I have a question to the Leader.
Firstly, if the Bell Bay aluminium smelter had not been operating during the past financial year, how much power would Tasmania have had to import through Basslink or, alternatively, how much power would Tasmania have been able to sell into the national grid? 
Secondly, given that new, highly efficient smelters are operating or are planned elsewhere, has the State Government had, or is it planning to have, talks about the future of the relatively inefficient and outdated Bell Bay smelter with its owner?
Mr PARKINSON - I thank the honourable member for his fairly complicated question.  The answer is fairly complicated as well.
The Bell Bay smelter is the largest single customer for electricity in Tasmania.  It has 'take-or-pay' contracts for the supply of 301 megawatts.  In a full year, operating as flat constant load, this would come to 2 600 gigawatt hours of electrical energy.  Over the 2007-08 financial year the net import of electricity into Tasmania over Basslink was 2 320 gigawatt hours. 
It is neither fair nor valid to associate any customer or group of customers with any particular source of the State's electricity supply.  The Tasmanian grid is energised by a large number of sources and a large number of customers draw energy from it. 
Along with several other large industrial loads, the aluminium smelter at Bell Bay is instrumental in Basslink's ability to import large amounts of energy into Tasmania.  The reason for this is a bit technical and has to do with security in the Tasmanian electricity grid.  The potlines at Bell Bay are part of the system protection scheme.  When Basslink is supplying large amounts of energy the industrial loads are put on standby.  If Basslink should trip off for any reason the large industrial loads also trip off so as to bring the total Tasmanian load into balance with the available supply.  In this way the smelter protects other Tasmanian customers from supply interruptions.
As to question two, electricity costs account for nearly 40 per cent of the cost of converting alumina to metal.  Since electricity is such a large cost item for the smelter, every effort is taken to ensure that it is used efficiently.  The smelter's energy use is a publicly reported annual performance measure.  The International Aluminium Institute web site shows that the energy efficiency at Bell Bay is better than the world average. 
The plant at Bell Bay has a long history, but it is not valid to imply that the plant is inefficient or outdated, or that it might be stranded by newer aluminium smelters.  The International Aluminium Institute ranks Bell Bay as number three in the world, out of 200 smelters, for its anode effect control, which is a key technology for reducing greenhouse gas emissions from the smelting process.  The Tasmanian work force is helping Chinese aluminium smelter owners to reduce their own greenhouse emissions associated with anode effects. 
Government officials and energy industry representatives maintain contact with executives from Rio Tinto Alcan at various levels.  The Tasmanian Government's position is that the smelter is an important and welcome contributor to the State's economy.
It should be noted that any relationship between the State, supply industry entities and very large industrial consumers is necessarily a long-term relationship.  Contracts for the supply of energy are commercial matters negotiated between the customer and the supplier at arm's length from the Government.