The West Coast regional and Buller district councils have come out against the proposed Mokihinui hydro dam, north of Westport.
Both say the dam would cause significant environmental and social impact, and Meridian's mitigation plans are insufficient.
Meridian Energy is seeking resource consent to build an 85m-high dam, 3km upstream from Seddonville. It would create a 14km lake.
The councils' surprise opposition came at the final day of the public hearing in Westport yesterday.
Buller District Council said the dam's size did not comply with its district plan.
The dam would destroy forest and vegetation, alter the landscape, and could increase coastline and riverbank erosion.
Some species, including blue duck, might not survive losing their habitat. Changes to river flow would affect whitebait catches.
The development would damage the proposed site's historic values, and affect recreational activities.
Meridian had not proposed enough mitigation, focusing mainly on the short-term impact of construction and not the long-term radical changes to the Mokihinui area.
The regional council said the dam and its associated infrastructure were "inappropriate" for the Mokihinui area.
Buller Conservation Group spokesman Pete Lusk said the councils' opposition was "quite unprecedented".
The chief executive of Buller Electricity, which supported the proposal, said the dam would provide secure electricity supply for Buller.
Mike McSherry was surprised the councils were not in favour. The environmental effects were minor weighed against the "huge" benefits, he said.
"Because they are generating locally they have lower costs and there is a good opportunity for Meridian to create real competition on this market," Mr McSherry said.
The independent commissioners will now consider Meridian's closing submission.
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