National power supply under threat: Meridian

By KEVIN TAYLOR and NZPA

One of the Government's big energy companies says a proposed law intended to fast-track its new power station is a direct threat to the country's electricity supply.

Meridian Energy's value could also be cut by $1.5 billion if Parliament passed legislation allowing the reallocation of Waitaki River water rights, a parliamentary committee was told yesterday.

Meridian chief executive Keith Turner said many mistakenly believed the Resource Management (Waitaki Catchment) Amendment Bill would fast-track legislation to allow the state-owned enterprise to secure the water it needed for the $1.2 billion Project Aqua.

But he told the local government and environment committee yesterday that the bill would slow the consent process by an estimated 12 to 18 months.

Meridian's water rights for its existing power stations were also under threat, he said.

"In its current form this bill constitutes a direct threat to this country's electricity supply. This bill puts at risk the production of electricity from the existing hydro stations on the Waitaki River, never mind Project Aqua."

The Waitaki catchment provided about a quarter of the country's electricity supply, Dr Turner said.

"New Zealand needs more electricity, not less. Where is the sense in a bill that will result in less electricity for a country facing an electricity shortage?"

If the bill allowed the reallocation of water rights in the Upper Waitaki catchment, and raised baselines for the amount of water that could be taken, Meridian would generate about 1500 fewer gigawatt-hours.

Dr Turner estimated this would reduce the value of the company by $1.5 billion.

"That is the cost to the country; that is the cost to the economy; that is also the cost to Meridian."

In a written submission to the committee, Meridian said reallocation to other users would entail the removal by law - and without compensation - of generating capacity bought on behalf of the nation through public money.

That wealth would in turn be given to private irrigators, and cut the value of Meridian's public assets by about $128 million - the equivalent of a loss of $100 for every household in the country.

Business New Zealand environment adviser Peter Whitehouse said the bill was ad hoc and his organisation disagreed with selective amendment of the Resource Management Act to "reflect the particular political flavour prevailing at the time".

"It is our contention that that is not a practice that leads to robust public policy development and it will ... only compound the implementation difficulties of the RMA that are clearly apparent at local government level.

"It's for this reason that we strongly recommend that this bill not proceed."

Phil Barry, appearing for the Business Roundtable, said its key concerns were possible erosion of existing use rights - which were effectively property rights - and the effects on the economy.

"If water is reallocated from electricity generation to other users without compensation, then either the electricity has to be generated elsewhere, maybe from coal or other non-renewable resources, or security of supply is put at risk in terms of the economy," he said.

"Most importantly, though, are the implications for investment."