Southland’s loss NZ’s gain?

Invercargill City Council has resolved to take out full-page advertisements in all major New Zealand newspapers to get across what it calls the “correct information” about the deal Meridian Energy and the smelter’s owner, Rio Tinto, are trying to negotiate over power prices.

I’m pleased my rates won’t be paying for that.

The rest of New Zealand, or at least the newspaper reading segment of it, might have a great deal of sympathy for the plight of workers facing redundancy and the downstream impact on Invercargill and Southland.

But sympathy is very unlikely to translate into action and if it did, what action would that be?

When the price of aluminium was high it might have made sense to import bauxite, use our relatively cheap power to convert it into aluminium and export that. But the world price of aluminium has plummeted and Rio Tinto says the power isn’t cheap enough to keep it here.

Getting across the “correct information” isn’t going to change that.

The ads are going to be even less effective if those who read them also read that there’d be no trouble getting excess power to Auckland if the smelter closed.

The ICC would be better employed working out how to attract businesses to the south to help employ those who would lose jobs in the smelter closed.

That might also provide a use for at least some of the excess power so it wouldn’t need to be sent north.

Without that, the loss of the smelter in Southland could turn into the gain of a greater supply and therefore lower priced power for the rest of New Zealand.

Meridian unlikely to reach agreement with smelter

Meridian has announced it’s unlikely to reach an agreement with Pacific Aluminium over supply of electricity to its Bluff smelter.

. . . Chief Executive of Meridian Energy, Mark Binns, says that Meridian has advised Pacific Aluminium of its ‘bottom line’ position.

“Despite significant effort by both parties there remains a major gap between us on a number of issues, such that we believe that it is unlikely a new agreement can be reached with Pacific Aluminium,” says Mr Binns.

In the event no agreement can be reached, Meridian will seek to engage with Rio Tinto and Sumitomo Chemical Company Ltd, the shareholders of NZAS, who will ultimately decide on the future of the smelter. . . 

The smelter is a big employer in Southland but falling global prices for aluminium have put pressure on its operation.

This announcement also has implications for power prices. Without the smelter supply could well be greater than demand.

. . . news that there may be no new electricity price agreement with New Zealand Aluminium Smelters carries huge implications for the electricity sector, which has struggled to grow in the last five years and would face a massive supply over-hang which could last years, were the smelter to close.

However, that outcome is not yet certain.

The smelter’s majority owners, Anglo-Australian minerals giant Rio Tinto, are locked into the first three years of an new 18 year contract, which took effect from Jan 1, took three years to negotiate, and had been agreed in 2007.

While the New Zealand smelter makes internationally recognised high grade metal, which sells at a premium, Rio has been hit hard by its exposure to the aluminium sector, where world prices have been hit hard since the global financial crisis.

Rio Tinto is seeking to sell the smelter, along with a clutch of other, older smelters in Australasia, which it has packaged as a new subsidiary, Pacific Aluminium. . . .

If my recollection is correct the smelter was wooed to New Zealand by the price of cheap electricity.

This is an example of the dangers of such policy. It was designed with the good intentions of job creation but has skewed the electricity market.

State Services Minister Tony Ryall says all relevant information – including about the smelter electricity contract – will be reflected in the Mighty River Power offer document which is currently being finalised.

Another reason to sell

The NBR provides another argument in favour of the sale of State Owned Assets.

Like other state-owned enterprises under the former Labour government, Solid Energy was encouraged to diversify its core business and take advantage of subsidies encouraging investment in renewable resources and technologies.

To try to put the blame for the company’s plight on National and its assets sales programme is turning reality on its head.

The same goes for Meridian and Mighty River Power having to sell out of similar forays after closer inspection by the Treasury and other as part of the government’s selldown policy.

That has included MRP withdrawing from a project in the US that was driven by government renewable energy subsidies there. . .

Meridian’s decision to withdraw from the Project Hayes wind farm also looked like a proposal driven by politics that didn’t stand up to financial scrutiny.

One good reason for partial privatisation is more financial rigor in the management of these companies.

Land & Water Forum’s final report generally welcomed

The Land and Water Forum’s final report fleshes out the detail of a new consensus for a major reform of water laws and practices in New Zealand,”  Forum chair, Alastair Bisley, said.

“The breadth of this consensus provides a once in a generation chance to resolve the entrenched problems surrounding fresh water.”

The Forum is recommending integrated decision-making in catchments, continuous improvement of management practices and clearer rights to take and use water within set limits.

Mr Bisley said: “Our reports together provide a comprehensive and detailed blueprint to maximise opportunities from fresh water for us all – farmers and fishers, power generators and recreationalists, citizens and tourists, cities and industries.

We want to grow the economy and improve the environment. Our recommendations apply to both urban and rural catchments. They provide for iwi to play their role as Treaty Partners and stakeholders.

“We call for community decisions at catchment level – within national frameworks and bottom lines from central Government.”

The Forum proposes a collaborative approach at both national and catchment levels to set and implement objectives for waterways, prescribe limits for takes and discharges where these are required, and to find fair, efficient and accountable ways to implement the limits.

“The Forum believes all water quality solutions should be tailored to individual catchments,” said Mr Bisley.

“Good management practice by land and water users is the basic tool. Incentivising it is the preferred approach. Regions are accountable for managing within limits. Industry schemes, catchment-wide initiatives and regulation may all help to ensure the limits are achieved within the agreed timeframes.

“Water available for users once limits have been set should be allocated with long-term economic welfare in mind.

“All authorised takes should be brought progressively within the allocation system.

“As catchments become fully allocated, consents should be clarified and strengthened to preserve their value. Water should be made more easily transferable between users while limits are preserved.” . . .

He described the report as a once in a generation opportunity :

 . . . While there were some notable non-signatories to the outcomes of the four year experiment in consensus decision-making, the forum managed to get 95 percent of its 60-plus members from industry, local government, iwi, environmental groups, recreational users and farmers across the line on 67 recommendations.

Among signatories are the national farming lobby, Federated Farmers, although their objection to any system requiring water rents saw the forum make no recommendation in that area.

The system it promotes would see the government establish national guidelines and standards for freshwater catchment management, which would be used by regional councils as the foundation for collaborative processes at a local level to establish “scarcity thresholds” for freshwater resources. . .

Dairy NZ has welcomed the report:

DairyNZ says the key to setting and managing to water quality limits is collaborative decision-making at a catchment level.

Commenting today on the release of the final Land and Water Forum (LAWF) report, DairyNZ chairman John Luxton says, “We recognise, as the LAWF report does, that this kind of community-driven catchment process needs to become the centre of water quality and quantity management.

“That is how we will make a difference to water quality – catchment by catchment across the country. Communities understand that, because people can relate any impact to the place where they live and work and their local waterway, so will take some ownership of the actions.”

He says that dairy farmers are already involved in these kinds of processes throughout New Zealand. . .

Beef + Lamb New Zealand Welcomes Third Land And Water Forum Report:

The final report from the Land and Water Forum strikes a balance between preservation and production, says Beef + Lamb New Zealand.

As a member of the forum we sought recognition for sheep and beef farmers as stewards of our rural land, while preserving opportunities for those who manage water sustainably.

It has been a long and complex process, says Beef + Lamb New Zealand Western North Island Farmer Director, Kirsten Bryant. “But, ultimately, one in which the voices of water users of all different types have been heard and in which we have all worked together for the good of all of New Zealand.”

She welcomed the emphasis throughout the process on local people making local decisions, within a national framework. . .

Meridian Energy also welcomes the report:

Meridian Energy today welcomed the release of the Land and Water Forum’s (LAWF’s) third report.

Chief Executive Mark Binns congratulated the Forum for pulling together a complex and diverse group of water interests.

“There are a range of views on the right approach to manage New Zealand’s fresh water resources. This forum has enabled all parties to put their views on the table,” says Mr Binns.

“Recognition should go to Chair Alistair Bisley and all Forum members for their four year collaboration. The result is three quality reports that will help improve water management for New Zealand.”

The water allocation report marks the conclusion of the Forum’s work. “LAWF’s collaboration provides an opportunity for making positive change to the way New Zealand manages its water. This framework is capable of protecting the environment and enabling economic growth,” says Mr Binns.  . .

Business NZ says the recommendations are positive:

The third report of the Land and Water Forum brings useful recommendations for improving New Zealand’s freshwater management, says BusinessNZ.

Chief Executive Phil O’Reilly said water was essential for many business activities which drive New Zealand’s economy and on which many New Zealanders rely for employment and income growth.

“Businesses require the confidence to invest in infrastructure and other capital projects knowing their rights to use water are clearly understood and secure.

“Investors are risk averse and any changes in the right to take or use water over time need to be clearly understood.

“It is important that transfer and trade in water rights are facilitated to the extent possible allowing water to move to its highest valued use, without unnecessary restrictions from regulators.”

Fish and Game says cherry picking would derail a water clean up:

Fish & Game NZ says the release of the third and final Land and Water Forum (LWF) report will only have an impact on improving freshwater management if the Government accepts all of the Forum’s recommendations, which are interconnected, and not pick and choose those which suit.

In these three reports the Government now has the bones of a blueprint – reached by consensus – for how to manage the public water resource, says Fish & Game NZ chief executive Bryce Johnson.

“All three reports must be treated as a package deal,” he says. “LWF’s second report recommended the need for a national objectives framework for water quality but the Government took it upon itself to develop these outside the forum framework. We’ve never had reasonable justification for that decision, which is odd given all the expertise was around the LWF table.

“LWF has been deliberating on these issues to reach a consensus for fouryears now and during that time freshwater quality and quantity has continued to deteriorate,” says Mr Johnson. . .

Federated Farmers supports the recommendations:

“Despite what is said at times about our environment, we must never forget we still enjoy some of the highest quality water on earth,” says Ian Mackenzie, Federated Farmers water and environment spokesman.

“LawF recommendations are about setting a pathway to protect and over time, improve our already high water quality. It is about better managing our most precious natural resource to fulfil our social, economic, environmental and cultural needs.

“Farmers support this aspiration and Federated Farmers is committed to playing our part in achieving it.

“We know the way we farm will need to change. Perhaps what needs to be fully understood is that change is also needed beyond agriculture. LawF covers all water, rural or urban, so we are all in this together.

“At the heart of LawF recommendations is for communities to adopt a collaborative process in setting water quality limits. This mirrors the one we have gone through on LawF itself. It is a very good way to understand issues in depth.

“Any collaborative process must be genuinely informed by what limits mean for individual communities. It is about striking a balance between what is feasible and what is not.

“Federated Farmers does take issue with some regional councils rushing to set limits. This fails to inform or involve the community in what will affect jobs, a community’s standard of living, or for that matter, its makeup.

“There are also some local councils who believe they ought to be exempted because they cannot achieve limit objectives and therefore, shouldn’t have to. It is the kind of thinking some farmers may have harboured decades ago, but not now.

“For agriculture, the regulatory process should embed Good Management Practice (GMP), the inclusion of farm environmental plans and where appropriate, Audited Self Management (ASM).

“Good Management Practice provides a holistic way to address water quality issues than the nitrate myopic approach suggested by many regional councils.

“Good Management Practice should further help communities decide where limits should be set, so as not to cause social and economic damage. I guess this is about empowering communities to find the right balance.

“LawF recommendations are a roadmap and Federated Farmers supports them,” Mr Mackenzie concluded.

Te Wai Maori Trust says the report is a practical and sensible solution to fresh water management:

New Zealand’s future as a leading primary sector producer as well as our nation’s 100% Pure New Zealand brand depends on our ability to sustainably manage the valuable fresh water resource. The third report of the Land and Water Forum (LAWF), released today, provides a responsible yet practical way forward to freshwater management, the Te Wai Maori Trust says.

Te Wai Maori Chairman Ken Mair today called on the Government to implement the recommendations, which found that iwi rights and interests must be resolved for any freshwater management regime to be stable and durable in the future.

“There are a range of competing uses for fresh water throughout the country – from dairying to crop farming, urban demands to tourism uses. But the Government will not be able to resolve them in a durable manner until it engages with iwi over Maori rights and interests in fresh water,” Mr Mair said. . .

Regional councils say the report cements their role:

Chair of the regional sector group Fran Wilde said the report cements the role of regional councils in managing New Zealand’s freshwater resource and highlights the need for a more supportive national framework for collaborative decision-making.

“Regional councils are at the forefront of water management and use a variety of methods to manage and enhance water quality,” said Ms Wilde.

“There is strong support among councils for collaborative decision-making regarding water quality management and we have a number of successful examples of this in action.” . .

Environmental Defence Society endorses Land and Water Forum Report:

The release of the third and final report from the Land and Water Forum has been welcomed and endorsed by the Environmental Defence Society.

The Forum originated at the 2008 EDS Conference where an initial support group from a wide range of interests, including farming and environmental, agreed to try and find a better way of managing freshwater.

“It’s been a long road since then, with the Government getting behind the exercise and the core group expanding to include representation from all key stakeholders and from iwi. Four years on there is now a package of measures that need to be taken together and implemented by Government,” said EDS Chair Gary Taylor. . .

However, Irrigation NZ says last minute changes weaken the report:

IrrigationNZ says last minute changes to the Land and Water Forum’s Third Report, ‘Managing Within Limits’, have weakened its integrity.

“IrrigationNZ has spent the past year collaborating in good faith to reach agreement on how water quantity and quality is best managed in NZ. A package that provided a sound platform to support sustainable future growth in New Zealand had been produced. However, last minute changes, particularly to the water allocation section, mean IrrigationNZ now questions whether the Land & Water Forum is the collaborative consensus- based process it claims to be?” says IrrigationNZ CEO Andrew Curtis.

While Mr Curtis says there are many positives within the final report, including the need for; community-driven catchment-based water management; industry ‘Good Management Practice’ as the preferred route; development of community water infrastructure to address over-allocation; and a move to plan-led water management – IrrigationNZ has major concerns about parts of the water allocation chapter.

Certainty is the key if irrigators are to invest in sustainability. Irrigators need long-duration consents and an explicit right of renewal,” says Curtis. “Short durations and uncertainty of renewal will produce reactive and high- risk thinking which creates scenarios prohibitive to capital investment. If the community wants environmental gains without job losses or food price increases, then New Zealand must implement a resource management system that allows for long-term investment and thinking.”

There is also a need for community-driven water infrastructure solutions to be consented for over 50 years. This would improve the viability of initial and on-going capital investment. In return for this, IrrigationNZ agrees consents need to adapt in a timely manner to environmental limit changes. “This is the most logical package for water allocation,” says Curtis. Having recently returned from an overseas study tour of irrigation developments in the UK, Israel and Australia he says, “It is also consistent with water allocation internationally.”

“Irrigators have committed to more sustainable farming practices. Certainty, long-term thinking and catchment-based water management are the only way water quality and quantity objectives set by the wider community will be achieved in New Zealand.”

The full report can be downloaded  here.

Customer service – spot the flaws

The call came from Meridian Energy about a final meter reading.

Caller: “The contractor went to do the final reading on Tuesday but couldn’t get in to the house.”

Me: “No-one lives in the house, the key is here.”

Caller: “Yes, I told them that and they were to call in to the house or office to get the key but they said no-one was there.”

Me: “Which day was that?”

Caller: “Tuesday.”

Me: “Some one was in the office from 8.30 until 4ish and I was in the house all afternoon.”

Caller: “Well, they said no-one was home and I want to book them again.”

Me: “Could they ring before they come to make sure someone will be here?”

Caller: “I can ask them but they have their own mobile phones and don’t like using them because they have to pay for them.”

Sigh.

This call was from an energy company but it could have been from numerous others which expect you to hang about waiting for them.

Mobile phones ought to make it so much easier for them to let you know when they’re likely to come.

Instead too many use them only to communicate with their own company and don’t worry about the customer.

Rural round-up

Visit highlights ‘extraordinary opportunities’: Sally Rae:

Anna Campbell has returned from a recent trip to China buoyed by the opportunities that she saw for New Zealand’s red-meat sector.   

Dr Campbell, a consultant at AbacusBio in Dunedin, described those opportunities as “extraordinary”.   

She was in China for two weeks, firstly attending a Harvard agribusiness course in Shanghai focused around global agribusiness opportunities, which attracted 60 people from around the world, although she was one of only four women. . .

Fonterra election now wide open – Hugh Stringleman:

The shock resignation of Fonterra director Colin Armer has thrown the forthcoming election for farmer directors of the huge co-operative wide open.

Anti Trading Among Farmers group Our Co-op has confirmed it will stand a candidate in what is expected to be a crowded field. It has not yet decided who . . .

People key to success of agri-food plan – Jon Morgan:

    It would be easy to pooh-pooh the latest strategic plan for agriculture. After all, it follows at least 10 others in recent history, all of which have made little or no impact. 

    This one comes from the Riddet Institute, a bunch of university and government scientists, and is the work of a Thought Leadership Team – a name evocative of ivory towers. 

    But to accept that this plan hasn’t a chance is to give up, admit that the task of harnessing the wonderful potential of the agriculture and food sector is beyond us. . .

Call to Arms to treble agri-food turnover – Allan Barber:

The Riddet Institute, a partnership of five organisations, The University of Auckland, AgResearch, Plant & Food Research, Massey University, and the University of Otago, encompasses the entire New Zealand science sector.

 In its report A Call to Arms launched last week, it challenges New Zealand’s agri-foods sector to take the steps needed to realise its potential which the Government’s Economic Growth Agenda estimates should treble to about $60 billion by 2025. This demands a compound annual growth rate of 7% which, when compared to the present rate of 3%, is a daunting task, unless some truly revolutionary thinking and, more important, action occur very soon. . .

Turners & Growers lifts first-half profit 2.2% to $7.1m:

Turners & Growers said first-half net profit rose 2.2 percent to $7.1 million but didn’t provide any other details.

The fresh produce company said it will release the details of its results for the six months ended June 30 by August 17, as “required by listing rule 10.4.” . . .

2013 Ballance Awards new category energy efficient farming:

The 2013 Ballance Farm Environment Awards will feature a new category award that rewards energy-efficient farming.

This award is sponsored by New Zealand’s largest renewable energy generator, Meridian Energy.

The New Zealand Farm Environment (NZFE) Trust, which administers the annual competition, has welcomed Meridian to the sponsorship family.

NZFE chairman Jim Cotman says the Trust identified the need for an energy award some time ago. . .

Free range hen farm to expand:

A $2 million expansion at the largest free-range poultry farm  in New Zealand will house another 16,000 hens on the property at Glenpark, near Palmerston.   

The 77ha site already has 48,000 Shaver hens, Mainland Poultry general manager for sales and marketing Hamish Sutherland said.   

When the free-range poultry farm opened in 2002, expansion was promised as the free-range market grew. . .

Overseer upgrade released:

Farmers and growers are being offered an enhanced tool to help them use nutrients efficiently.

The owners of the OVERSEER® Nutrient Budgets software are releasing a major upgrade today.

Overseer is available free of charge through a partnership between the Ministry for Primary Industries, the Fertiliser Association of New Zealand and AgResearch.

The upgrade to Overseer Version 6 reflects user feedback on previous versions says Mark Shepherd of AgResearch, the Overseer technical team leader. . .

Costs and benefits of development

Hans van der Wel looks at the pros and cons of  Meridian Energy’s plans for hydro development on the Mokihinui river then asks some very good questions in the wake of the company’s decision to withdraw from the plans.

. . . The intriguing question was if the court would accept whether this would have been enough to make up for some significant environmental loss.

Would it have found that this met the twin aims of the Resource Management Act, of enabling people to provide for their wellbeing through development, and still making sure that key environmental values are maintained?

How would it have weighed the various benefits against the undeniable drawbacks?

How important is providing for locally generated renewable energy to environmental outcomes?

Is it important enough to require some sacrifices to be made to achieve it?

How much can you compensate for the loss of one set of special values by improving others?

Must conservation always trump economic development, or can the two assist each other? . . .

These questions could and should be asked of all development.

We have only one world and looking after it is important but that should not be a moratorium on development.

Any development has consequences, the question is whether when everything is taken into account – economic, environmental and social considerations – the benefits outweigh the costs.

Plug pulled on Project Hayes

After six years of environmental hearings, Meridian Energy has pulled the plug on its Project Hayes wind farm on the Lammermoor Range.

Project Hayes was by far the country’s largest wind farm project when it was first announced, and envisaged a 633.3 Megawatt station with 176 turbines stretching across a plain that is both barren and ecologically important. 

Lovers of the sparsely populated area’s vast landscapes, including former All Black Anton Oliver and painter Grahame Sidney, were among chief opponents of the project, and were the reason the Environment Court turned down Meridian’s application in 2006.

The resource consents granted in 2007 were challenged in the Environment Court, which cancelled them, leading Meridian to appeal the cancellation in a process that had been ongoing until today.  . .

It appears Binns viewed Project Hayes as an expensive legacy issue, which was potentially unwinnable, and he said the economics of the project had become less attractive.

“Our portfolio has developed considerably and our review showed us that other projects now are a higher commercial priority than Project Hayes,” said Binns in a statement.

“Meridian now has a number of potential development options that would be progressed ahead of Project Hayes. Withdrawing the consent applications is not only the most prudent commercial decision for Meridian, but also avoids prolonging uncertainty about this project for the community and the project’s supporters.”

Total costs over the nearly six years the issue has been live amounted to $8.8 million, of which $7.2 million would be written off in the forthcoming annual accounts.

It was a very controversial project which attracted strong opposition but it also had strong support from some locals.

It has cost the company a lot of money and it was also expensive for those opposing it.

The project was started by then- CEO Keith Turner who was also behind Project Aqua, Meridian’s attempt at hydro development on the Lower Waitaki River. Investigations for that were estiamted to have cost the comapny about $95 million before it was canned, although that included purchases of land which were subsequently sold at a profit.

One of the arguments for partial privatisation is that it will impose more rigor on companies which are now 100% owned by the state.

I wonder if the company would have attempted to do this development had a minority shareholding been in private hands and whether that would make a difference in future?

Energy changes bring lower prices and dividend

The government will receive a special dividend of $520,996,030  from Meridian Energy following the sale of two hydro power stations on the Upper Waitaki.

The sale is part of a package of Government reforms aimed at improving the electricity sector. Meridian is selling Tekapo A and B power stations on the Waitaki Power Scheme to Genesis Energy.

In December 2009 the Government announced its decisions from the Ministerial Review that include a series of changes that support the overall Government objectives to improve retail competition in the industry, promote the reliability of electricity supply and improve governance in the sector through the establishment of the Electricity Authority.

I had my doubts about the wisdom of this policy when it was first mooted. But this dividend and the lower prices we’re seeing as a result of increased competition have changed my mind.

Competition brings down prices

I greeted the announcement that the government was going to require Meridian and Genesis to swap some of their assets with wariness.

Dividing the power schemes on the Waitaki River and its tributary between two companies had both benefits and costs and I wasn’t sure if it would work.

But in the last week we’ve had letters alerting us to cheaper deals from Genesis now it’s generating hydro power in competition with Meridian which used to have a monopoly on the Waitaki.

Competition works.

Hunter Downs irrigation scheme gets consent

Meridian Energy has gained resource consent for the Hunter Downs Irrigation Scheme.

 

The Hunter Downs Irrigation Scheme is a community irrigation proposal developed by the South Canterbury Irrigation Trust (SCIT) and Meridian.

The scheme would potentially irrigate up to 40,000 hectares of land from the Waitaki River stretching as far north as Otipua. It would provide opportunities for land use diversification, including horticulture, sheep, beef and dairy farming.

The South Canterbury Irrigation Trust was convened by the Mayors of the Timaru, Waimate and Mackenzie District Councils to develop sustainable irrigation solutions for South Canterbury.

The scheme would involve diverting water from the Waitaki River into an irrigation intake near Stonewall at the existing site of the Morvan Glenavy Ikawai irrigation scheme intake, 35km downstream of the Waitaki Dam.

From there the water would be pumped about 140km for delivery to farms using a pumping station, canal and pipe system.

This is similar to North Otago Irrigation Company’s scheme. It pumps water from the Waitaki to a pond then pipes it under pressure to farms. The first stage covering 10,000 hectares is fully subscribed and the company has started selling shares in the second 10,000 hectares.

The arrival of reliable water has transformed our valley and its value, not just to farms but to the district’s economy, has been highlighted by this autumn’s drought.

There are obvious gains in production but that hasn’t come at the cost of the environment. All shareholders are required to have an environmental farm plan which is independently audited every year.

The scheme has also improved water quality in the Waiareka Creek turning what was little more than a series of near stagnant ponds into a flowing stream.

There have also been social benefits. For the first time since the ag-sag of the 80s farmers’ adult children have returned home for work. There were eight houses on our road before the scheme was launched, now there are 13.

Consent for the Hunter Downs scheme is another step towards similar development in South Canterbury with a corresponding increase in economic, environmental and social benefits.

Water’s running out

Meridian Energy is spilling water from the Waitaki dams – Benmore, Aviemore and Waitaki – becasue the hydro lakes are too full.

The water pouring over the Waitaki Dam reminded me that Federated Farmers keeps reminding us our problem isn’t that New Zealand is running out of water but that the water is running out of New Zealand.

When we’ve got this much water rushing out to sea, what’s the problem with harvesting some for irrigation, power generation and recreation?

Waitaki Dam’s 75th birthday

The Waitaki Dam was the first of eight to be built on the Waitaki River and the last to be to be built by the pick and shovel method .

Construction started in 1928. The decision to use labour rather than machines was a deliberate one to provide work during the Depression but it wasn’t easy work:

. . . working conditions were hard with cold winters, flooding, and earthquakes to work through. The work force often toiled in knee high water, and lived in temporary housing near the site. 

It was during these construction years that Kurow’s Presbyterian Minister, later to become Sir Arnold Nordmeyer, and local doctor Dr Harold McMillan, saw the working and housing conditions and the many who camped near the site hoping for work.  As a result these two men began the initial thinking around what was to become one of the world’s first social welfare assistance programmes – the Social Welfare Act (passed by Parliament in 1938).

The dam was commissioned in 1934 and Meridian Energy, which now owns it, hosted public celebrations for its 75th anniversary yesterday.

David Bruce  covered the dam’s history and interviewed some of the people who worked on it for the ODT.

Waitaki’s Deputy Mayor, Gary Kircher, blogs on yesterday’s celebrations.

This photo of the dam was taken earlier this year when Meridian was spilling water becasue the lakes were too full.

Power games

Sometimes the Waitaki River runs higher than normal even though there hasn’t been rain or snow melting in its catchment.

The locals reckon it’s because Meridian Energy is letting water out of its hydro dams to generate (ouch) a shortage so it can put up the price of power.

The company denies that.

Whether or not it’s true, the way the system works means that power companies can benefit from shortages because the spot price for electricity rises.

The Electricity Review  , released yesterday by Energy Minister Gerry Brownlee, suggests compensating consumers if they face conservation plans which will be one way of disincentivising companies from manufacturing shortages.

That’s good in theory, but there are concerns that the elderly who tend to be very thrifty anyway, might not heat their homes properly in order to save power. When it’s cold if you don’t have an alternative to electrical heating, you’re faced with using power or freezing.

Other recommendations in the review are:

* governance improvements with the Electricity Commission replaced with an Electricity Market Authority. 

* line companies allowed back into retailing 

* a reallocation of assets among SOE generator-retailers to increase competition in wholesale and retail markets.

Security of supply and affordability are two factors which concern consumers most.

Some in Central Otago also took environmental concerns into account. The Otago Regional Council’s clean air policy prompted some to convert their home heating from wood burners to heat pumps but they now find they can’t afford the power bills.

While individuals can make savings, one of the biggest wastes of power appears to be in transmission.

I’ve yet to find a definitive answer to the question of how much electricity is lost getting it from where it’s generated to where it’s used, but even if it’s less than 10% (and no-one has suggested it’s that low), the cost of wasting that much all day, every day ought to provide an incentive to generate power as close as possible to the end user.

Benmore spillway open again

Rain and melting snow have over-filled hydro lakes so Meridian Energy has opened the spillway on Benmore Dam.

Low lake levels get blamed for rises in power prices, can we expect high levels to lead to a price fall?

 

I didn’t have a camera with me so took these photos on my phone. Better quality shots from when the spillway was opened in Janaury are here.

There were signs warning of surface flooding at the start of the Lindis Pass when we drove home from Wanaka yesterday and there were several places where the river had crossed the road. 

We passed a sign saying road closed ahead just east of Omarama. It was open when we got there but workers were looking at washouts around the bridge over the Otamatapaio with concern.

Further down the Waitaki Valley the river flats were flooded. We’re about 20 kms from there as the crow flies, had 100 mls of rain over the weekend and it’s pouring again now.

Greenmail or compensation?

When is money paid by the applicant for resouce consent to an individual or body objecting to the consent greenmail and when is it compensation?

The question has come up as the story (three posts back) about Meridian Energy paying DOC has developed.

John Key says the payments would be okay if it was to offset environmental impacts  but not if it’s hush money.

Director-General Al Morrison said a suggestion DOC accepted money in a secret deal to remain quiet over the windfarm proposal is totally inaccurate.

“In this case an agreement was reached which resulted in $175,000 being set aside to improve public access to nearby conservation land and for a series of plant and birdlife issues to be addressed,” Mr Morrison said. . .

. . . “Clauses were specifically entered into the agreements to ensure the details could be publicly released once signed and they have already been fully tabled, including the amount agreed, before the Environment Court,” he said.

Trust Power spokesman Graeme Purches says it  also had an agreement with DOC but:

Mr Purches said some people are calling these deals bribery but that is wrong.

“It’s about working with stake-holders to get a win-win. It’s not about bribery. I think anyone who suggests you can bribe a Government department like DoC has got rocks in their head,” Mr Purches said.

The Resource Management Act allows for payments to be made to mitigate or compensate for adverse effects of any development.

What raised hackles with this example was the suspicion DOC had accepted the payment to remain silent and had done that because of a decision by the previous government to take a whole of government approach in support of the application.

P.S.

Kathryn Ryan had extended interviews and also covered the issue in this morning’s political slot on Nine to Noon;  and Mary Wilson interviewed Al Morrison on Checkpoint.

Alf Grumble  asks, what’s up Doc?

It’s not their money

 Does Meridian Energy realise what it’s saying?

Increasing power prices now would shield customers from large increases if and when planned schemes came about: “Small increases provide a smoother path for consumers.”

 Is it the job of a power company to “provide a smoother path for consumers”?  That sounds like they think  they’re better able to manage our money than we are.

My concern is increased because of the proviso “if and when planned schemes come about”

What happens if planned schemes don’t come about, will we get our money back, with interest?

And how much more power generation do we need? The reduction in production at the Tiwai aluminium smelter means there is considerably less demand for power than there has been for some time.

The Remuneration Authority has a similar line  with regard to local body pay rates:

Authority chairman Richard Oughton, in the circular, said some local bodies were considering not increasing pay.

He said the increase from July 1 was conservative, somewhat less than it should be based on market conditions.

“A zero increase could create a situation where a larger, and perhaps less publicly acceptable, adjustment may be needed from July 1, 2010.

Further postponing an adjustment at that time would only serve to exacerbate the problem,” he said.

 He too is saying that a lower increase now will mean a bigger increase later.

I think ratepayers would prefer to keep a little more of their own money now and worry about how acceptable future pay increases are when the time comes. 

The government is sending very strong messages about the need for restraint so it’s possible that the pubic and private sector salaries on which councillors’ remuneration is based may show little or no increase in the short to medium term.

That would mean the big increase that Oughton is concerned about may not eventuate anyway.

If it does, at least we’ll have had a wee bit more of our own money under our own control in the meantime.

Opening the spillway

The lake levels are too high in the Waitaki hydro lakes so Meridian Energy has opened the spillway in Benmore dam:

More water from the Benmore dam fills Lake Aviemore so the spillway in the Aviemore dam is also open and that in turn puts more water into Lake Waitaki so the  the Waitaki dam is now overflowing:

The Waitaki River is now flowing at 950 cubic metres a second. We might want to remember that next time there’s a power crisis.

However, the high flow is welcome because the flood will clean up a lot of the didymo (also known as rock snot) which is thought to have been brought into New Zealand is fishing waders and now infects many of our rivers.

The high flow will also move a bank which has developed at the river mouth.

National good has local and national cost

The Timaru Herald urges people to think of the national good before appealing to the environment Court over the resource consent granted to Meridian Energy.

The fact that a significant chunk of power – enough to run a city the size of Christchurch – can be generated, apparently cost-efficiently, surely deserves strong consideration. Barely a winter goes by without security of power supply being raised as a potential problem, so significantly increased generation capacity must be a positive thing.

I agree but the national benefit isn’t without local and national costs.

The obvious one is environmental from reduced flows but there could be an economic cost too if fishing and boating which bring tourist dollars into the region are affected. And there will definitely be a local and national cost if Meridian’s project threatens the reliability of supply for irrigation.

The Mid River New Applicants’ Group, which represents irrigators on the lower river, wants Meridian to guarantee that reliable water supply will not be affected.

Ensuring reliability for existing irrigators is also something Waitaki Mayor Alex Familton will be watching closely.

He said the NBTC scheme would benefit the Waitaki district in terms of potential employment and an improved infrastructure.

However, he said it was vital present irrigators, at the very least, maintained their reliability of supply and were not disadvantaged by the scheme.

The Lower Waitaki irrigation scheme has been operating for about 30 years, the North Otago Irrigation Scheme is just over two years old and there are other smaller schemes, all of which provide 100% reliability of supply for farmers.

Any threat to that reliability is a threat to farming businesses, it would be a bit like building a hotel then finding that the road to it was only open some of the time.

The MAF Briefing to Incoming Ministers  noted the contribution irrigation makes to the economy:

In 2002/03, irrigation was estimated to contribute around $920 million netGDP “at the farm gate”, over and above that which would have been produced from the same land without irrigation. Since then, the area of irrigated agriculture and horticulture has increased by about 25 percent, from 480 000 hectares to around 600 000 hectares.

Both a reliable supply of electricity and irrigation are important for the economy, the concern is that Meridian’s scheme to increase the former will reduce the latter.

Meridian gets interim approval for Waitaki power scheme

Meridian Energy has received interim approval for its application to take water from the Waitaki River for its $900 million north bank power scheme.

The Otago Daily Times has been told it is an interim decision, which grants a water-only resource consent but is subject to agreement on conditions.

Meridian applied to ECan to take up to 260cumecs from the lower Waitaki River above the Waitaki dam for a 34km tunnel between the dam and Stonewall, near Ikawai.

A single powerhouse would generate between 1100 and 1400GWh of electricity a year.

The company’s plans for a power scheme on the Lower Waitaki began several years ago with Project Aqua which would have built a canel on the south bank. However, that was abandoned before it an application for resource consent was made.

Meridian then began investigations into the north bank scheme which has received objections from conservation and recreation groups and people with existing use rights, including irrigators.

The approval could be appealed to the Environment Court and the company still has to apply to the Waimate District Council for a land-use consent.