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Mr Andrew Newman, HBRIC Ltd CE,
introduced the item and advised that he would also respond to questions
raised in an ‘open letter to Councillors’ received via email
yesterday and tabled. In terms of the HBRIC strategic plan, Mr Newman advised
that development is at a stage that the Board wishes to engage with
Councillors at a workshop, which will be scheduled in May if possible.
Mr Newman then provided verbal responses
to the questions as detailed (copied from the email) following.
Q. Andrew Newman stated
in his recent HB Today talking point that HBRIC is contracting farmers to
switched from ground water takes to stored water. How many land owners and
what volume of water has HBRIC included in the signed conditional contacts
which meet this criteria?
A.
Deep water agreements 19 comprising– Countersigned volume 3.804
mill m3; with balance in contracting phase 2.862 mill m3 for total volume
6.666 mill m3. A further 5.180 mill m3 in negotiation, totalling potentially
11.846 million m3
Q. Given that it seems
unlikely that any prudent business owner would swap the supply of free water
(ground water) for water costing 27c/m3 have any land owners been offered
discounts of any sort to encourage them to meet this criteria?
A.
Correct listed price is 26 cents/m3 = 23 cents take or pay and 3 cents
variable. As has been stated previously and in public record discounted price
is 10 cents take or pay + 3 cents variable energy charge for 5 years (post
water delivery) with that price tied to CPI inflator. Extraction of
groundwater is definitely not free – ranges from 6 cents (under
pressure) to 25 cents if you’re 150 metres down.
Q. The monthly report does not update
progress on signed conditional contracts. What is the current number of land
owners and what volume of water is now on signed conditional contracts?
A.
38 countersigned contracts with a further 55 in the contracting phase.
Balance volume of water countersigned is 15,361 mill m3 and in the contracting
phase 15,787 mill m3 for a total 31,147 mill m3 with the balance of 56 mill
m3 in negotiation pipeline
Q. Has a lien clause now
been included in the contracts?
A.
There is no lien clause, and never has been. There’s been no change to
the letter of credit security mechanism in Water User Agreements
Q. There have been 4 earthquakes in New
Zealand in the last 100 years with a magnitude greater than 7.5, with none
greater than 7.8. One of course being the 7.8 magnitude 1931 Hawke's Bay
earthquake. Why has the dam not been designed to withstand a 7.8 magnitude
earthquake rather than a 7.5?
A. The
dam is located on the Makaroro River, to which the nearest fault is the
Mohaka fault and so more relevant than the HB(1931) earthquake fault line. Mohaka
very well studied fault. Most important shaking hazard posed to dam site is
from the Mohaka South segment, max design earthquake MDE of 7.5 and mean
recurrence interval of 1300 years and last ‘moved’ about 300
years ago. Dam is designed to withstand and continue operating post a 7.5,
also designed with withstand higher magnitude quake without failure but with
some damage expected.
Q. There is no update on the consequences
the Plan Change 5 decision may have on the RWSS consents. What is their
opinion?
A. We
specifically suggested to the BoI that they consider the issue and invite
other parties to comment. Our comment filed with the BoI noted that due to
the very narrow range of issues being dealt with at this late stage the PC5
matter had no effect on the Tukituki proposal specifically. We await the BoI
decision.
Q. There is no update of any consequences a
delay in the DOC land swap proposal may have on the RWSS. If HBRC are unable
to obtain free title to the 22ha what are the consequences to the ability of
RWSS to meet its storage capacity targets? My understanding is that the
capacity of the dam will drop to something like 30 million m3, although I
could well be wrong in my calculations. Never the less a significant issue
I'm sure you will agree.
A. HBRIC
understanding is that DOC is undertaking a robust process in working its way
through the land exchange process and to-date we are not anticipating that
that should impact us in reaching financial close.
There was
further discussion around the design standards for the dam in relation to
catastrophic failure, and the process of obtaining building consents for the dam
structure, including who would be liable if the dam owner finds a fault with
the dam after consent has been granted.
In relation to
the financials, there were queries about the original forecast cost of the
EPA process (initial EPA forecast was $1.5M), the actual cost of feasibility
for the RWSS (Phase 1 feasibility cost to Council was $3.5M and phase 2 development
expenditure by HBRIC (from Oct 2012) is $18.4M), and a more defined breakdown
of what makes up the Other Consultants & Miscellaneous budget. It was
requested that the date for the Strategic Plan workshop be set as soon as
possible.
There was
discussion about the calculations used to arrive at the 40M m3 threshold
condition precedent, the Council resolution last month which “Notes
that if expenditure on geotechnical works is required prior to financial
close HBRIC Ltd will bring a formal proposal to Council for approval of such
expenditure”, and the requirement for a building consent prior to
actual dam construction beginning.
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