SOE chases $1bn power plan

By JIM EAGLES Business Herald editor

State-owned power generator Meridian Energy is pursuing a $970 million hydro-electricity and irrigation scheme on the Lower Waitaki River that would boost national electricity production 8 per cent.

The company said yesterday that it was exploring a hydro project on the south bank of the river that would generate 3200GW/h of electricity a year and irrigate nearly 39,000ha of South Canterbury and North Otago land.

Meridian is picking up and revising a concept first investigated by Government agencies more than 30 years ago.

Unlike other Waitaki River power schemes, it would not involve building dams but the construction of a 62km canal linking six power stations.

A Meridian spokesman said yesterday that preliminary investigations indicated the scheme would produce power at an average price of 4c a KW/h - within the range of South Island power prices last year - which the company believed would be competitive.

Meridian expects consultation, geo-technic investigation, land acquisition, seeking resource consents and other preliminary work to take at least two years.

It estimates construction could take up to six years - although it might be built in stages - requiring a workforce of about 1900.

The result would be a power scheme of similar size to the original Manapouri power station and with a capacity of 570MW.

Meridian is already the largest of the three state-owned power generation companies, with an existing generation capacity of 2323MW, focused on the Upper Waitaki and the about-to-be expanded Manapouri/Te Anau system. New Zealand has a surplus of generation capacity, but rising demand is expected to catch up with supply by the time the project would start producing power.

In any case, Meridian said its decision to investigate the proposal in detail was based on projections that Southland and Otago would have faster economic growth than the rest of the country, particularly through power-hungry industries like dairying and wood processing.

The company is also eyeing the possible expansion of the aluminium smelter at Tiwai Point and the prospects for new silicon and magnesium smelters which have been aired recently.

Building the associated irrigation system is expected to take 10 years and require a further workforce of about 300.

When completed, Meridian's advisers say it would add up to 1800 fulltime jobs and $145 million of value to the region.

The project is likely to run into opposition from conservationists and the company's announcement placed heavy emphasis on the environmental benefits. In particular, Meridian stressed its ability to help meet the country's future energy needs "without emitting carbon dioxide, unlike thermal power stations."

Chief executive Dr Keith Turner said drawing off water would still "leave significant flows in the Lower Waitaki River to preserve the existing river ecosystems and meet the needs of other river users."

Conservation Minister Sandra Lee welcomed the company's intention to start consultation so early in the process. But she emphasised that the Department of Conservation's statutory role would be to "advocate for the conservation values of the Lower Waitaki."