Waitaki River legislation threat to nation's electricity supply, MPs told

By KEVIN TAYLOR, political reporter

One of the Government's political allies is rethinking support for a bill establishing a water-allocation process for the South Island's Waitaki River after extraordinary criticism from state-owned power company Meridian.

Meridian chief executive Keith Turner told a parliamentary committee last week that the Resource Management (Waitaki Catchment) Amendment Bill posed a "direct threat" to the country's electricity supply and would increase prices.

He said it threatened the water rights Meridian held for its eight upper Waitaki power stations, which produce a quarter of New Zealand's electricity.

Dr Turner questioned the sense of a bill which would cut electricity supply when a nationwide power shortage was looming.

United Future energy spokesman Gordon Copeland said the party would seek changes to the bill. It would be unacceptable for Meridian's existing property rights to be threatened.

Green Party leader Jeanette Fitzsimons said the party was also reserving its support at this stage.

National environment spokesman Nick Smith said the Government may now be unable to get the numbers to pass the bill.

Meridian is planning Aqua, a $1.2 billion project to build a canal and six hydro power stations on the lower Waitaki, but Dr Turner said that far from fast-tracking the project, the bill would slow the process by 12 to 18 months.

When Meridian learned of the bill last year it told the Government of the implications, but was ignored.

Dr Turner told the Herald that the company had used the Official Information Act to get Cabinet papers to discover the Government's thinking.

The SOE then wrote its own bill, which proposed tradeable water rights and wrote out any threat to the 35-year water rights it has held on the upper Waitaki power stations since 1990.

Dr Turner said he also raised concerns about the bill with Meridian's shareholding ministers, Finance Minister Michael Cullen and SOEs Minister Mark Burton.

But he said consultation with Meridian by the Ministry for the Environment had been superficial. The ministry treated Meridian as an applicant because of its Aqua proposal and had kept at "arm's length".

"We were unable to engage on the issues, so the best thing we thought we could do was convert our thinking on the issues into a draft piece of legislation.

"We tried to put that draft to the Government. They told us they did not want to receive it."

Dr Turner said any chance of its being considered were quashed when the Otago Daily Times requested Meridian's bill from the ministry and published a story.

"As a consequence, ministers were put in the position of having to say they would not be adopting Meridian's bill for this legislation."

Dr Turner said the bill threatened to wipe $1.5 billion off the company's value.

"The dangers to Meridian are profound because you can't borrow from lenders and maintain their confidence in your earnings capacity, when a bill like this can come along and wipe off just at a stroke a large proportion of your earning capacity."

Spokesmen for Environment Minister Marian Hobbs and Energy Minister Pete Hodgson said their ministers would not comment on Meridian's submission on the bill.

Dr Smith said a special law for the Waitaki was unnecessary, but reform of the Resource Management Act was needed.

"The bill's a sham and is being roundly criticised by local residents, the company concerned, business interests as well as environmentalists.

"I don't think the Government's got anybody supporting them on the bill and they should withdraw it and let the normal RMA process proceed."

The committee has to report to Parliament by mid-March.

Bill protest

* The Resource Management (Waitaki Catchment) Amendment Bill establishes a water allocation board and commissioners panel to determine water rights in the Waitaki catchment.

* The Government argues for intervention because current water right decisions are made individually and in the order received, but there are many competing calls on the Waitaki including Meridian's proposed $1.2 billion Aqua power scheme.

* Meridian says the bill threatens the country's electricity supply and water rights it holds on eight upper Waitaki power stations.