Meridian Energy strategy development manager Guy Waipara told the court if Contact Energy wanted to run its reservoirs to maximum in the presence of wind power, there was more chance of spilling water.
Contact Energy might have to pull back from targeting peak demand, when prices were at their highest.
"It is about giving up some revenue, to be honest,'' Mr Waipara said.
He said no company should be entitled to supply power solely during peak demand, when the most money could be made.
Contact Energy wanted conditions placed on TrustPower's planned wind farm at Mahinerangi to upgrade transmission lines out of its Roxburgh dam, saying it had been forced to spill water at Roxburgh due to line constraints.
Mr Waipara said construction of Meridian's 630MW Project Hayes wind farm would not be able to proceed without a transmission lines upgrade.
With the amount of generation coming on line in the lower South Island, it was inevitable a lines upgrade had to occur. An estimation by Meridian Energy that there would be a bottleneck when Project Hayes was producing only 150MW of power was a very early projection, and a lot more work had been done since then.
Early cost estimations of the lines upgrade were "underdone'' and did not indicate an estimation of actual cost.
The best way to increase lines capacity was to upgrade the network in a staged way. Mr Waipara agreed Project Hayes was not being built to service local power demand.
Energy consultant Bill Heaps said there had been 700 occasions in 2006-07 when water had been spilt at Contact Energy's Roxburgh dam due to line constraints. This was just 0.05% of the time the dams were operating.
However, Contact Energy counsel Kerry Smith said that was still more than once a day.
Mr Heaps said that in 2004, Transpower offered to replace the transmitter at the Roxburgh dam which was causing the constraint, which would have cost Contact Energy $4 million. Contact Energy declined.
The constraint caused by lines between Otago and the Waitaki Valley occurred only 0.3% of the time and would only increase to less than 4% with TrustPower's Mahinerangi wind farm.
- The wind farm hearing has silenced the chimes on the Town Hall clock in Dunedin. Environment Court case manager James Waitai said the chimes had to be silenced, as when they rang, witnesses reading evidence could not be picked up by microphones taping the court.
