Lobby group casts cloud over Might River share sale
Lake erosion claims another hiccup for Mighty River, reports Vernon Small.
A Lake Taupo lobby group is calling for the Mighty River Power share float to include a warning it may face a review of water use, after claims it is causing erosion by holding lake levels too high for too long.
The move casts another cloud over the partial privatisation of the state-owned enterprise, planned for later this year.
It has already been threatened with delay after a Waitangi Tribunal hearing - and a likely legal challenge - over water rights.
Waikato Regional Council has called for submissions on whether to review MRP's consents next year, amid claims it has breached undertakings to maintain Taupo close to natural levels.
Taupo District Council has backed a review of the consent, which was granted in 2006 for 30 years. It allows MRP to operate Taupo between maximum and minimum levels, but with no control on the distribution between those levels.
Mayor Rick Cooper said in a letter to the WRC that while MRP was not solely responsible, there was evidence erosion was linked to the management of lake levels.
Friends of Lake Taupo spokesman Tim Truebridge said MRP should disclose in its prospectus a potential liability from a review.
"We have nothing against the float, but we think the investing public should be aware of the total cost required to maintain Lake Taupo in a natural way, albeit as part of a hydro scheme."
State-owned Enterprise Minister Tony Ryall said the company "will be required to disclose all relevant and material matters" in the prospectus.
He referred Fairfax Media to MRP for further comment, indicating the directors of the company were responsible for determining which issues were "material" and should be disclosed.
Mr Truebridge said if it was proven the current regime was a significant cause of erosion then the council would be required to undertake a review next year.
"It might decrease MRP's ability to maximise revenue through use of the resource."
Estimates had been made of the potential impact on MRP but he did not want to put a figure on it.
"Who knows . . . there are two ways to measure cost. The impact on revenue if [the consent] is changed and if it is not changed the potential cost of erosion and who pays for the mitigation."
Critics have pointed to evidence of more "high lake level events" and fewer "low lake level events" since consents were granted.
A spokesman for MRP said it was aware of the claims being raised by Friends of Lake Taupo.
They were considered at length during the 2006 consenting process.
"There are proper processes administered by the Waikato Regional Council for consideration of whether there is scientific merit, or not, to those claims."
In the six months to the end of 2011 MRP reported a 9 per cent increase in operating earnings to $254.5 million and an increase in market share.
It approved a dividend of $74.8m to the Crown.
Chairwoman Joan Withers noted the company enjoyed "relatively favourable hydrology in the Waikato River catchment in contrast to poor South Island hydrology", which had complemented its baseload geothermal capacity.
Generation yields were up more than $20/MWh to $80.16/MWh.
Chief executive Doug Heffernan said the increase in generation was largely driven by more gas-fired production in response to higher wholesale prices.