Grandest plan yet for the great Waitaki

By CHRIS DANIELS

When the state-owned power generator ECNZ was split into four competing companies in 1999, Meridian Energy found itself with one of the jewels of New Zealand's energy system, the Waitaki River scheme.

The Waitaki catchment covers a vast area of the South Island, with an interconnected series of lakes and canals giving Meridian the means to use the same drop of water to spin turbines at eight different power stations.

Between 1935 and 1985, the Government spent billions on works designed to extract as much electricity as possible from the river.

Ministry of Works engineers built a network of stations - Waitaki, Tekapo A, Tekapo B, Ohau A, Ohau B, Ohau C, Benmore and Aviemore.

Now Meridian has taken the mantle from the Ministry of Works and wants to use the last untouched stretch of the Waitaki to complete the chain. It is calling the ambitious, $1.2 billion scheme Project Aqua.

If built, Meridian will control the river from the snowy heights of the Mackenzie Basin down nearly the entire length of the Waitaki to the coast near Oamaru.

Aqua will begin not far from the Waitaki Power Station, commissioned in 1935 and one of the last big hydro works in New Zealand built with picks and shovels, a place where men shifted more than half a million cubic metres of earth and rock to build the massive weir.

Meridian hopes the future of electricity generation on the Waitaki will soon take shape just a few kilometres downstream of this historic, yet still functioning, monument to 1930s engineering.

A 62km canal will begin near the town of Kurow, diverting more than 75 per cent of the water and sending it through a series of six small power stations before rejoining the river a few kilometres from the coast.

These stations will supply as much power as the Clyde Dam - around 8 per cent of New Zealand's entire energy needs, or 570MW. It is the biggest single-generation project planned for the next few years.

But building Aqua will be different to how the other Waitaki hydro projects were built, for Meridian has to do this one by the book, and there is a new book - the Resource Management Act.

The act is why Meridian is in the process of commissioning thousands of pages of scientific reports, investigating the effects of Project Aqua, while consulting with the locals and flying journalists (including this writer) to the site for media tours.

Over the past 50 years, Government engineers moved from project to project, building impressive dams and power stations to supply the country's burgeoning need for electricity.

But demand and supply were not closely linked - an oversupply of electricity meant very cheap power for New Zealand and, in the past few years, little or no incentive to build any new stations.

The numbers Meridian bandies about are impressive.

It says the project will irrigate 39,000ha of North Otago land, inject $145 million annually into the regional economy and create 1800 fulltime jobs. Around 30 million cubic metres of earth must be shifted for the project to succeed.

Meridian chief executive Keith Turner makes no bones about the fragility of the plan - if he cannot get permission to take sufficient water out of the river, the canal will never be dug, and the river will remain as it is.

"The water is so critical, every little drop matters to this project, a small, few per cent change in the availability of water - because it's there for year after year after year, it makes a big difference to the economics."

One crucial factor going into the Project Aqua equation is the future cost of wholesale electricity - Aqua will generate it at a cost of between 4c and 4.5c a kilowatt hour. Average wholesale prices for power in the week before last ranged between 2.48c and 3.06c per kilowatt hour.

The looming depletion of the Maui natural gas field means that thermal power stations - such as those at Huntly and Otahuhu, will find their fuel bill becoming more expensive.

Most energy analysts agree new generation is needed - and that the electricity that comes from the new stations will be more expensive. And hydro, once built, is as green as they come, a poster project for sustainability and the use of renewable resources.

"One of the misconceptions is that there are huge profits in this - there are not," says Turner. "You can't spend $1200 million and get nothing back. You've got to earn enough to pay the interest on the debt, enough to pay off the asset and enough to pay a fair return on the equity.

"This project is pretty finely balanced economically. It may look as though it's enormously profitable - I can absolutely demonstrate that it's not."

He says the events of last winter showed the South Island will soon be at serious risk of power cuts in the event of a dry year.

Energy demand is growing quickly in the South Island, and if the rivers run dry there will not be enough power available from the North Island thermal power stations to come to the rescue.

Alan McLay, mayor of the Waitaki District, based in Oamaru, supports Project Aqua, and believes it will be built. But he is not an unquestioning cheerleader for Meridian. The memory of high-handed actions by previous governments lingers in this part of New Zealand.

"I like to think positively about these developments, but positively without forgetting the things that have happened in the past, when there was some reasonably rugged land acquisition and people were very poorly compensated," he says. "I suppose that's in the back of my mind when I think of these things."

McLay is inspired by the irrigation plan that will accompany Aqua, with possibly 40,000ha to 50,000ha opened up for more intensive agriculture and predictions of 1500 new jobs.

McLay puts the curious Aqua observer straight onto Bruce Parker, if he is asked about the reasons for opposition to Aqua.

Parker, an Oamaru architect, is president of the Waitaki River Users' Liaison Group, an umbrella organisation formed to respond to the development.

He points out that there is only a small section of this river that has yet to be altered by hydro development.

"North Otago, in effect, provides the largest chunk of energy, through hydro, to the country.

"From that you have to look at what has occurred in the past and ask, 'What has North Otago got out of that?' The answer is three lakes we didn't have before."

Meridian wanted to take three-quarters of the river's water to use for its power stations, leaving very little to support the popular fishing area.

"Surely it is time to leave some natural river section in there for purposes other than just generating income."

Parker is sure the nation will benefit from Aqua, but feels the local community will "get dorked again".

"We think we are sacrificing this great river for the national interest again and again and again. No one is building us a new river."

It is the only river in New Zealand that has an adult run of mature chinook salmon, brown trout and rainbow trout.

One of Parker's arguments is that Meridian is wrongly looking at Aqua as an isolated project - with the economic cost and benefits incorrectly quarantined from the economics of the whole Waitaki River scheme.

Aqua, says Parker, is the completion of the whole chain of hydro stations stretching right up the catchment to Lakes Tekapo and Pukaki.

But Meridian, which will apply for resource consents towards the end of this year, says the project must stand or fall on its own economic merits, not those of the rest of its network. Then, if successful in gaining suitable water rights, it will put the scheme out for tender, meaning a final decision on whether to proceed might not be made until at least 2005.

By which time, say some, New Zealand will be crying out for more electricity to meet a seemingly unquenchable thirst for power.

www.meridianenergy.co.nz/about-us/projects.html