Fog on the Water

The Government’s new plan for freshwater management is about as foggy as the Waikato on a frosty winter morning…  Wonder why?

Mighty River Power – the vanguard of the Government’s drive to pull private investors into its new Mixed Ownership Model for State-dominated enterprises – has been at war with the Waikato Regional Council for almost seven years. It’s a subject that – so far - everyone has skirted round in all the debate over the imminent MRP share float.

The battle for the Waikato centres on Mighty River’s demand that electricity generators should be given primacy over all other potential commercial users of river and lake waters in the sprawling central North Island catchment that embraces the largest concentration of hydro and geothermal power plants in the country.

This is an issue that has to be addressed in any new freshwater management regime for any region where hydro and water-using thermal power schemes compete with other commercial and industrial users for rights to fresh water. It will also need to be addressed in any prospectus for potential investors in Mighty River, Genesis Energy and Meridian Energy.

The three state-owned power generators about to offer shares to private investors have similar questions to answer: Who will get first dibs in the contest for water that’s surplus to basic human requirements, how will any contest be determined, and who makes the decision?

The battle started in 2006 over a proposed variation in the Waikato council’s Regional Plan. The Council wanted to address inefficient allocation and use of water in the region. Demand for Waikato water had the potential to exceed available supply, and in some catchments consents to take water had already exceeded allowable limits. A council hearing committee spent 21 days hearing submissions before producing recommendations for adoption.

The Waikato Regional Council adopted the recommendations, sparking 29 appellants – including Might River, Genesis, and Meridian - to take their objections to the Environment Court. After 49 sitting days the Environment Court produced its judgment on 30 November 2011.

The Environment Court increased the Council’s proposed limit to allocable water from 3.6 percent to 5 percent of a 5 year average of the Waikato river’s minimum flow at Karapiro – the most downstream of Mighty River’s eight hydro dams.

The Court rejected Mighty River’s argument that this increase would diminish its consented rights to the “full available flow” of the Waikato river for power generation. It shared the Waikato council’s view that this did not mean the “full flow of the river” and stated that “any exclusive take and use right should be clearly conferred by a consent in clear and unambiguous language”. Round 1 to the Council.

Round 2 started a little over a year later. It was now time for the Waikato Council to review its regional plan – beginning with the production of a Regional Policy Statement. This statement had Mighty River Power back at the Environment Court. Again, it’s pressing the case for electricity generation to have top priority in the allocation process for Waikato River water. This time, its claims were couched in more urgent terms.

“The Company views the Proposed Waikato Regional Policy Statement's lack of recognition and acknowledgement of the Waikato Hydro Scheme as a profound and inexplicable shortcoming…

“This shortcoming has the potential to adversely impact on the existing and continued operation of the Scheme and on this occasion has resulted in the development of unrealistic and inappropriate objectives and outcomes for future regional and district plans.”

An adverse impact with the potential to impact on the continued operation of Mighty River Power’s eight hydro power plants on the Waikato River! That should have had alarm bells ringing – but the appeal was lodged on 13 December last year and passed under the media radar.

Mighty River Power asserts that the Waikato Region has been substantially shaped by the historic development of the Waikato Hydro Scheme and that history will continue to define the future options for the management of the Waikato River. In its eyes, that means:

The Regional Policy Statement needs to recognise that the options for and health and wellbeing of the Waikato River will be circumscribed by the practical implications of the Waikato Hydro Scheme's existence and continued operation.”

MRP goes on to present a long list of circumscriptions that need to be made to the Waikato Regional Policy Statement to sustain continued operation of existing hydro and geothermal power generation – and to provide for further development to meet future energy needs from the region’s so-called renewable natural resources of water and heat.

It’s a list that will challenge the aspirations of all other drought-parched water users in the Waikato region, the environmentalists and conservations alarmed at the degraded state of the river, and the patiently pursued hopes of central North Island iwi and hapu to see a new system of co-governance applied to the task of restoring and protecting the health of New Zealand’s longest river.

There are just two short references to electricity generation in the discussion document on the Government’s plans for freshwater management released last weekend. Neither of them explains the priority that should be given to the Government’s National Policy Statement for Renewable Power Generation - one of the key drivers of MRP’s appeal.

Next month, the Government will finish its first round of rushed consultations on resource management and freshwater reforms. At the same time, the directors of Mighty River Power are supposed to be signing off a prospectus that should outline risks to the future value of the business. I keep waiting for someone to hit the fog horn. Still wonder why?