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The Chairman outlined the process to be undertaken in
consideration of this item.
Councillor Beaven spoke to his
Notice of Motion and outlined his rationale for putting it forward. The
alternative proposal the Motion seeks investigation of is being put forward
by Councillors Beaven, Belford, Graham and Barker as they believe it reduces key
risks in the current HBRIC scheme, while still accomplishing the key goals
intended for water storage.
The core assumptions of the alternative proposal (distributed via
email to Councillors, the HBRIC Ltd CE and Chairman, the HBRC CE and Mr Mohi)
are summarised as:
• Cheaper
‘dam-only’ proposition – do away with distribution network
(or minimise the network)
• Can use
dam on Makaroro at similar scale
• Water
price can be reduced through alternative
• Dam-only
has improved environmental outcomes
•
Only public sector funding to be used
Mrs Lambert provided an
overview of the staff’s understanding of the core assumptions of the
alternative proposal for a dam only, without the distribution network;
followed by staff’s preliminary understanding, of the impacts that the
alternative would have on the scheme footprint and the rivers/streams and
aquifers in the basin.
In relation to the distribution
network, Mrs Lambert explained that because the Waipawa River loses
3.0 -4.7 cumecs of surface water to ground water (equivalent to 95 million m3
per year and the approximate static storage of the dam) a head race is required
from Waipawa to Tukituki rivers. Without the head race it will only be
possible to provide water to 30% of the customer base that is proposed to be
supplied by the RWSS – from either proposal.
In response to queries, Mr Iain
Maxwell provided an explanation of the hydrology, flows and losing/gaining
reaches in the rivers on the Ruataniwha Plain, and modelling which has proven
that pumping groundwater permanently reduces the base flow of those rivers.
Although the aquifers recover partially between irrigation seasons, they
never recover to the previous top level therefore resulting in a permanent,
increasing reduction over time. Scientists do expect the aquifer to reach an
equilibrium at some point, where the levels will not decline below a certain
level, however it is uncertain when this equilibrium might be reached.
Mrs Lambert then explained that
the RWSS (proposed) canal head race has a capacity of 8.8 m3/s
to service 17,200 ha and requires 58m m3 of water at a
cost of $42m or 0.72c/m3. Based on preliminary calculations, the alternative
proposal for 10,000 ha requires capacity of 5 m3/s using
40m m3 at an estimated cost of $36m equating to 0.90c/m3.
Mrs Lambert further explained
the principles of possible cost impacts of scaling down the scheme, resulting
in a smaller customer base able to access the water, and provided cost
estimates calculated by running the alternative proposition through the same financial
model used to determine the price of water for the Council approved RWSS scheme.
Some comparisons provided:
Current proposed dam has 90m m3
storage volume to service 25,000 ha, which has a value of $120M = $1.34/m3
of water – Whereas alternative dam proposal to service 10,000 ha
requires 40m m3 and has a value of $99M = $2.50/m3 of
water.
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Alternative Proposal
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Alternative Proposal without Opex
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Capex
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$135M (99-dam, 36 – distribution)
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$135M
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All other capex (land purchase etc)
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As HBRC approved proposal
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As HBRC approved proposal
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Electricity revenue
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$6M
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$6M
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Saleable volume
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36M m3
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36M m3
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Financing
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HBRIC (80M) plus institutional investors
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HBRIC (80M) plus institutional investors
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Opex cost
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Pro rata reduction in opex costs but retain all
Centralines costs
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Pro rata reduction minus Centralines and SPV
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Cost per m3 of water
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$1.18
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0.77c
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In terms of the ‘improved
environmental outcomes’ mooted in the alternative proposal, Mrs Lambert
explained that the proposal assumes groundwater can be pumped with no effects,
however the effects of groundwater pumping would significantly compromise all
spring fed streams in Zones B, C and D – which provide key spawning
native fish habitats. In addition, the dam size would have to accommodate
flushing flows requiring an additional storage capacity of around 4M m3
to the dam size proposed. The alternative of on-farm storage for 90M m3
would require 3,600 ha of land (possibly productive).
One of the reasons given for
the alternative proposal is “to avoid the expensive cost of private
money” by removing private sector capital and publically funding the
dam via HBRIC Ltd and the Crown, removing the need for high commercial
returns. In fact, CIIL (the Crown) will invest only once private sector
capital has been exhausted and will not enter into a financial
structure not involving the private sector, so the alternative proposal would
not ‘qualify’ for Crown funding. HBRIC (HBRC) cannot reasonably afford
to fund the difference.
Commercial
and structural issues with any major departure from RWSS as proposed and
consented include:
·
Groundwater abstraction sections of Plan Change 6 will need to
be substantially re-written through a further Plan Change process
·
Alternative proposal will need to go through a new resource
consent application process
·
The alternative proposed doesn’t enable unified control
of nutrients
·
Construction contracts will need to be significantly
renegotiated and economies of scale could be compromised for a smaller
project
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The Crown (if willing) would need to completely re-structure
their investment criteria to suit an amended RWSS
Finally, all of the aspects of
the alternative proposal have been put forward, examined and discarded at
various stages through the pre-feasibility and feasibility stages of the RWSS
project and the HBRC adopted proposal brought together the optimum package
for cost, water uptake and price.
The alternative proposal is not
hydrologically feasible, will increase the unit cost of water, will
necessitate additional plan changes and resource consent processes, and could
jeopardise agreements already negotiated.
Speakers on the motion
traversed the aspirations of the proposed alternative, the rationale for
proposing the alternative, and the extensive investigations and research
carried out by expert in engineering, resource management, science, commercial
and environmental law, geology and hydrology science, among others through
the pre-feasibility and feasibility stages of the project in arriving at the
Council-approved proposal. Speakers also raised their support for the
decisions and outcomes of the Board of Inquiry process and the expert
engineering, scientific and environmental advice heard and considered there
to determine its final decision and grant resource consents for the RWSS.
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