Meridian pulls plug on Mokihinui project

A decision by Meridian Energy to exit a controversial Mokihinui hydro project on the West Coast has been welcomed by environmental groups and the Department of Conservation.

Meridian Energy announced this morning that it will not proceed with the project that had been planned for the West Coast of the South Island, citing high costs and risks surrounding a project that encroached on environmentally sensitive land.

The project has been formally withdrawn from the Environment Court process, the state-owned energy firm said.

The Department of Conservation and other groups had appealed against the decision granting resource consent for Meridian's project on the Mokihinui River, located north of Westport.

The 85-metre-high dam would have created a 14-kilometre-long lake, and generated between 310 and 360 gigawatt hours of electricity each year.

The $300 million dam and power station was to have been built three kilometres upstream of Seddonville. At hearings DOC opposed the plan, arguing that the dam and surrounding infrastructure would have an impact on the river and wildlife.

The Green Party said Meridian Energy made the right decision.

"The campaign to save the Mokihinui has been running since 2007. Meridian's proposal would have resulted in the inundation of conservation land destroying 300 hectares of irreplaceable river gorge habitat for kiwi, blue duck, kaka, falcons, giant land snails, native bats, and the long-finned eels that live along the Mokihinui," Green Party co-leader Russel Norman said.

"New Zealanders love our wild rivers and want them protected. This is a great day for all New Zealanders."

Given that potential for a dam was a major factor for its exclusion from Kahurangi National Park, the Government could now take this opportunity to include the Mokihinui River in the national park, he added.

The Department of Conservation said it welcomed and supported Meridian Energy's decision regarding the proposed Mokihinui hydro development.

Director General Al Morrison said DOC has worked closely with Meridian on issues surrounding the project for some years, and now looked forward to continuing to develop its relationship with Meridian.

Forest & Bird also welcomed the announcement.

"This is a great victory for conservation, and a courageous decision by Meridian," Forest & Bird Advocacy Manager Kevin Hackwell said.

"We are pleased that Meridian has made the right decision for a very special part of the West Coast, and for the future sustainability of the coast and New Zealand."

Meridian chief executive Mark Binns said the decision was difficult and followed a full review of the hydro scheme and the risks and uncertainties the project faced prior to becoming a reality.

"The project had a strong business case and would have been beneficial to the West Coast, but it was challenging as the project footprint encroached on Department of Conservation stewardship land.

"Given the positive economics offered by the project and the benefits it would bring, Meridian progressed the project.

"However, our recent commercial review of the project determined it was not prudent to proceed further given the high costs and the risks of the process involved  which includes not only securing the resource consents but also land access under the Conservation Act," Binns said.

"It was the difficulty associated with seeing a path through the land issue that was of most concern."

The Mokihinui Hydro Project received resource consent in April 2010, following stakeholder engagement and public consultation.

The decision was appealed to the Environment Court by the Department of Conservation, Forest & Bird, Whitewater NZ, and West Coast Environmental Network Trust.

Meridian would also have been required to work through a separate Conservation Act process because the project would have had an effect on public conservation land, Binns said.

"While the decision to withdraw from the Mokihinui Hydro Project is the right commercial decision for Meridian it is no doubt a very disappointing outcome for all those who supported the project, particularly on the West Coast," he said.

It would be important for industry and stakeholders to work together constructively on how to rule projects in as New Zealand's energy needs continue to grow over coming decades, he said.

Parliamentary Commissioner for the Environment Dr Jan Wright said she had had reservations about the project for some time but had not wanted to comment while the issue was in front of the Environment Court.

''However, there is still an ongoing tension between hydropower and wild and scenic rivers in that both are good for the environment but they are very hard to measure against each other,'' Wright said.