The hearing is considering responses to a draft proposal that will divert water from Meridian’s eight power stations to other users and for conservation. In its plan, the Waitaki Allocation Board (WAB) has set new minimum flows for the river.

The WAB was set up after the collapse of Project Aqua – a Meridian plan to build 60km of canals with six power stations. Meridian is required under its existing licence to maintain a minimum river flow of 120m3/sec. The draft plan increases that to 200m3/sec in winter and 230 in summer.

Environmental group Waitaki First says it supports a draft proposal to divert water from power stations in the Waitaki River, as it makes sense from a conservation standpoint. Opponents of the new water allocation however – including the Waitaki District Council and the Ministry for Economic Development (MED) – say it effectively rules out any more large scale irrigation or hydro development.

MED has warned that the proposal to divert water from the power stations could push electricity prices up by 24%, and may result in consumers paying a US$21M surcharge if the proposals are approved. It says that could push energy generation away from hydro to fossil fuel plants, raising costs and prices. The Energy Efficiency and Conservation Authority (EECA) says reducing the access could set back New Zealand’s goals of increased use of renewable energy.

The Waitaki region could also lose up to US$38M of farm earnings, if there is not enough water for proposed irrigation of 45,000ha, the Government said in its submission on the Waitaki River draft allocation plan. If there was insufficient water for irrigation, the loss at the farm gate would be US$986 a hectare for dairy and pastoral farmers.

The Government is asking the Waitaki board to change the draft plan to keep Meridian’s minimum flow at 120m3/sec and that Meridian operate on the Waitaki in accordance with its existing resource consents. That would allow more water to be allocated for agriculture and horticulture.

Meanwhile, Meridian Energy and Comalco have begun negotiating a power supply contract, expected to be worth more than US$3.5B over 20 years.

Transmission lines from the Manapouri hydro power station feed Comalco’s Tiwai Point Aluminium smelter at Bluff. The negotiations cover the price Comalco will pay the state-owned power company after 2012.

Comalco’s Tiwai Point aluminium smelter at Bluff uses about 15% of all New Zealand’s power, mainly from the large Manapouri hydro power station. Power makes up 40% of the US$1.4B plant’s cost of producing aluminium.

Comalco is already concerned that falling hydro lake levels this year could lead to wholesale spot prices rising again, which could force it to cut production. Comalco, a subsidiary of the multi national mining company Rio Tinto, owns 79% of the smelter. The balance is held by Sumitomo of Japan.