A proposal to build a $900 million power scheme on the lower Waitaki River could be a pre-emptive move by Meridian Energy Ltd to deter competitors from planning other schemes using the same water, Victoria University senior lecturer Geoff Bertram said yesterday.
He suggested that was one of the problems facing an Environment Canterbury hearing panel considering four resource consent applications by Meridian for its proposed north bank tunnel concept power scheme between the Waitaki dam and Sonewall, near Ikawai.
Meridian wants water for the scheme before investing in detailed planning.
It would then apply to the Waimate District Council for land use resource consents to build and operate the scheme.
Dr Bertram, who was giving evidence for Waitaki First and the Waitaki Protection Trust, said Meridian operated in a market in which considerable importance was placed on strategic positioning.
It was possible Meridian could proceed with tunnel scheme even if it was not commercially viable to retain pre-emptive control over the water in the lower Waitaki for strategic reasons.
That would enhance Meridian's market power in the electricity sector, at some potential cost to consumers.
Another problem is the barrier to early entry by any alternative users for the water, he said.
To ensure the tunnel scheme is economic, Meridian wants the Waitaki catchment water allocation regional plan's minimum flow of 150cumecs for the lower Waitaki River lowered to variable flows of between 110cumecs and 150cumecs.
The plan also allocated water between the Waitaki dam and Black Point for hydro electricity generation, but Meridian has applied for more.
Dr Bertram said there may be other proposals which, though smaller than the tunnel scheme, might still be economically viable within the plan's 150cumecs minimum flow.
They would be viable competitors for the water which Meridian sought to secure, he said.
However, competitors would be effectively deterred from undertaking research and design work for their schemes if a pre-emptive right was granted to Meridian.
Even a "use it or lose it" restriction on Meridian's water right would not fully address pre-empting competitors and alternatives, Dr Bertram said.
Questioned by hearing chairman Prof Peter Skelton, Dr Bertram said he was not aware of any other hydro generation plans to use the water, but other smaller schemes could come forward if it was available.
Prof Skelton said that was not the way the Resource Managament Act worked.
Water permits had to be dealt with on a first come, first served basis.
Dr Bertram said there were large amounts of wind, geothermal, biomass and run-of-river hydro available which would cost less per unit of electricity produced than the tunnel scheme.
The scheme was not a must have for the development of additional electricity until 2037 on current information, due to its high cost relative to other types of generation, he said.
