Legalised Extortion
We have recently seen much discussion in the media regards the price of electricity and the effects this is having on our business communities.
A classic example being the recent Raetihi town hall meeting on Tuesday 27^th^ August which came a week after Winstone Pulp International, the Ruapehu District's largest employer, said it planned to shut Karioi Pulpmill and Tangiwai Sawmill “indefinitely” as soaring electricity cost make it too expensive to keep the mills running.
The closures will have an ongoing effect on the community, with impacts reaching as far as the people stacking supermarket shelves and cleaning.
The impact of these closures is “bigger than the directly affected 230 people, 230 jobs. This is the entire region”.
Earlier in August there was a temporary two week shut down due to the soaring price of electricity with electricity now 600% more expensive than it was in 2021.
After that temporary two-week shutdown, Winstone chief executive Mike Ryan confirmed he planned to shut the two mills indefinitely.
So where does the legalized extortion come in?
It’s certainly not a part of the Winstone responsibility as they are just one of the more obvious outcomes from it.
The Legalised Extortion in my opinion comes in under the Resource Management Act which allows persons and organisations to claim compensation payments for the effects of a Resource Consent Application (and its associated operations).
There are many cases where it is right that persons or organisations which are affected by the granting of resource consent should be compensated for those detrimental effects, but there are a huge number of cases where it has become nothing more than a source of income for those wishing to oppose the granting of consent.
Nothing more than legalised extortion in my honest opinion!
An obvious example of this happening is seen in the recent renewal of the consents for the Waitaki Hydro scheme run by Meridian Energy.
Meridian paid out compensation to DOC, Fish & Game and Iwi, rather than risk them blocking their renewals of these consents.
It’s an open secret that it is easier to grease the wheels rather than risk being held up for years in court appeal processes so they just agree to pay the rent seekers and add this cost to the bottom line which is then paid for by the consumer.
It may be frightening to the average person to realise just how much these compensation payments are. In this case with Meridian Energy and the Waitaki Hydro Scheme, Meridian has agreed over the 35 years of the consent, to pay $73.5 million to DOC; $2.8 million to Central South Island Fish & Game and an estimated “confidential” $104 million to Ngai Tahu.
The Waitaki Hydro Scheme consists of eight power stations from Lake Tekapo to Lake Waitaki. Meridian owns and operates six of these stations from a control centre in Twizel, generating energy from water flowing from the Southern Alps out to the sea.
The Tekapo basin and Waitaki River, with eight hydro stations and about 50% of New Zealand’s hydroelectric storage, are critical to New Zealand’s electricity supply.
The New Zealand government recognised the electricity generation potential of the Waitaki Valley as early as 1904. However, work on the large-scale project only began in the 1920s. The Waitaki dam was the first station to be built on the Waitaki River, as a ‘make work’ project during the Depression of the 1920s and 30s.
In 1958, the Mid-Waitaki hydro scheme began with the construction of Benmore dam and the DC link. This was the start of a unified power transmission system for the whole of New Zealand. The scheme was completed in 1968 with the commissioning of Aviemore power station.
The Upper Waitaki hydro scheme began in 1968 in response to New Zealand’s increased need for power. Work continued until 1985 when the last station, Ōhau C, was commissioned.
During that time four hydro stations were constructed, along with two dams and six canals (totalling 56 kilometres).
The six hydro stations from Lake Pūkaki to Waitaki that Meridian owns generate enough electricity each year for about 832,000 average New Zealand homes.
In July 2023 Meridian lodged applications with Environment Canterbury for continued operations of the Waitaki Power Scheme under the Resource Management Act.
The scheme was completed in 1985 when the last station, Ōhau C, was commissioned, and nothing is planned to change as a result of this application being granted yet Meridian has been effectively held to ransom with what I believe is the veiled threat of opposition to the granting and the associated delays and costs for court actions.
Nothing more than legalised extortion in my opinion!
This is only the beginning, what happens when the Waikato River Hydro scheme comes due for renewal of its consents or the Wairakei Geothermal scheme?
The Waitaki scheme renewal has added $180.3 million in costs to our power bills over the next thirty five years and we would have to be crazy to think that the renewal of the Waikato Scheme would not be at least as much if not a lot more.
The current renewable energy developments in both wind and solar generation have also been hit with similar types of compensation claims.
And what do we get for these payments; nothing more than the bill which shows as a huge increase in our electricity prices.
The government has spent the last few years under Labour and now under the coalition, telling us that we have to turn away from fossil fuelled power and onto the use of electricity and I am sure that this must have the rent seekers sitting back rubbing their hands with joy at the prospect of such a captive market boosting their ability to levy their form of legalised extortion.
This system of gaining compensation payments through the resource consent process is in my opinion nothing more than legalised extortion and proves that the consent process is wrong, killing business development and the planned overhaul of the Resource Management Act cannot come soon enough.