Meridian Energy's Project Aqua power scheme is dead, killed off in a shock announcement by the company yesterday.
Uncertainty over the future of the $1.2 billion canal-based power scheme on the south side of the lower Waitaki Valley meant the commercial risks were too high for Meridian to continue to invest money in it.
Already, the company has spent about $45 million on Project Aqua and another $50 million buying land in the Waitaki Valley.
While the $50 million spent on land is secure, the rest will come out of the profit Meridian will pay to its only shareholder, the Government.
It was investing about $4 million a month on preliminary design work and to comply with resource-consent processes.
Instead, Meridian is to turn its attention to other forms of electricity generation that can be put in place quickly to help ease a growing power shortage in New Zealand.
One of the options Meridian chief executive Keith Turner focused on yesterday was wind power.
There has been growing uncertainty over the future of Project Aqua since the beginning of this year, partially fuelled by growing opposition throughout New Zealand.
The trigger point for Meridian's decision to end Project Aqua appears to have been the amendments to the Resource Consent (Waitaki Catchment) Amendment Bill reported back to Parliament last Monday, followed by a High Court decision in Christchurch on Tuesday.
The Bill, not foreseen by Meridian, had "complicated the process" and would have delayed the project another three or four years, Dr Turner said.
The decision by the High Court to look at the status of water rights Meridian held for its eight power stations above the Waitaki dam called into question the future of the water the company already uses. Dr Turner said the court action could affect Meridian's existing operations in the Waitaki Valley.
"If we lose water in the upper Waitaki, clearly we don't have cash to put into major capital investments." That prompted a meeting of Meridian's board of directors on Sunday, at which the decision was made to end the project.
Minister of State-owned Enterprises Mark Burton, who holds the shares in Meridian on behalf of the Government, was told of the decision on Sunday night.
Yesterday afternoon, Meridian called a press conference to announce its decision.
Dr Turner made it clear Meridian's position was not negotiable, and the decision had been accepted by Mr Burton.
However, asked if Project Aqua might be resurrected, Dr Turner said: "I can't say what may happen in the future. Who knows what New Zealand's energy scene may be like in 20 years time?
" Meridian would now withdraw its resource consent applications and a notice of requirement for a land-use designation it lodged last May with Environment Canterbury, the Otago Regional Council, and the Waitaki and Waimate district councils.
Yesterday's decision was driven by a series of commercial uncertainties which made the risk of spending more money on Project Aqua unacceptable, he said.
Meridian was keen to develop wind generation as a more immediate answer to electricity shortages.