Contact Energy Limited Proposed Amendments to the National Policy Statement for Freshwater Management 2011

Transcription

1 Contact Energy Limited Proposed Amendments to the National Policy Statement for Freshwater Management 2011 Proposed Amendments NPS Freshwater Management 1

2 This submission by Contact Energy Limited (Contact) is in response to the Discussion Document: Proposed amendments to the National Policy Statement for Freshwater Management 2011 (Discussion Document). Contact s interest is: The implications of a standards regime for water quality for the security of New Zealand s electricity generation - hydro electric and geothermal and thermal; The workability of the framework proposed, particularly the exceptions regime. Contact wishes to be involved in further discussions on the proposals contained in this Discussion Document and would be pleased to participate in discussions involving others in the electricity generation sector. For any questions relating to this submission please contact: [ withheld ] Contact Energy Limited [ withheld ] 2

3 Introduction and Summary of Submission About Contact 1. Contact is one of New Zealand s leading energy generators and retailers, providing electricity, natural gas and LPG to around 570,000 customers nationwide. Contact s 11 geothermal, thermal and hydro power stations generate approximately 23 per cent of New Zealand s electricity. The company is one of the country s largest wholesalers and retailers of natural gas, and has around 46 per cent of the LPG market in New Zealand. 2. Contact is one of New Zealand s largest listed companies and most widely held stocks with around 75,000 shareholders. It employs approximately 1,100 people throughout New Zealand, making Contact an integral part of the national economy, our diverse society and local communities. Contact and freshwater Clutha Hydro Scheme hydro electric generation 3. Within the Otago Region, Contact owns and operates the Clutha Hydro Scheme incorporating the Hawea Control Structure, the Clyde Dam and Power Station and the Roxburgh Dam and Power Station. The Clyde and Roxburgh Power Stations have a generating capacity of 752MW. Depending on inflows to the catchment, the Clutha Hydro Scheme meets between 7% and 10% of New Zealand s electricity demand. 4. In addition, Contact holds resource consents to construct a small hydro generating plant in the foot of the Hawea Control Structure. 5. Contact operates Lake Hawea within an 8 metre normal operating range behind the Hawea Control structure. Lake Hawea accordingly provides managed water storage. The balance of the inflows into Lake Dunstan is uncontrolled. Lake Dunstan is operated within a normal operating range of 1 metre. Lake Roxburgh has a normal operating range of 2.45 metres. The relatively small operating ranges in Lake Roxburgh and Lake Dunstan (in particular) mean that while water can be stored intra day in order to better match flow releases to nationwide electricity demand, water cannot be stored day to day. 6. The Clutha scheme has no diversions or canals. This fact, combined with the comparative absence of storage, means that the Clyde and Roxburgh Power Stations operate on a run of river basis. 7. The Clutha Hydro System was reconsented in 2007 with 35 year consents. The resource consents granted involve, at each site, a consent to take water at the upstream end of the structure (a take permit), and a separate consent to discharge water below the structure (a discharge permit) into the same water body. Accordingly Contact s use of water to generate electricity is non-consumptive. 8. The flows and levels in the Clutha River are set by way of Contact s resource consents rather than regulated by any water allocation/flow regime in the Regional Plan. For example, 3

4 Contact s consents require a minimum flow of 10 cumecs out of Lake Hawea and a minimum discharge of 250 cumecs out of the Roxburgh Power Station. Contact s consents do not allow it to dewater any part of the Clutha or Hawea Rivers. The Clutha scheme is tailor made for the particular environmental conditions on the Clutha and the result of a lengthy and robust process. 9. Hydro generation does not add contaminants to the waterway (other than trace hydrocarbons) though Contact s resource consents provide for the discharge of contaminants because it has no option but to discharge water with whatever contaminants are in the water column when it arrives at the upstream end of each structure. 10. In practice, the principal contaminant in the water column is sediment, particularly at times of high/flood river flow. Other uses of freshwater thermal and geothermal 11. Contact takes and discharges freshwater: a. for cooling at its thermal and geothermal plants from the Patea River for its Taranaki combined cycle and Stratford thermal peaker plants from the Waikato River for Wairakei, Te Huka and Ohaaki geothermal power stations and Te Rapa Co-gen plant from streams in the Upper Waikato catchment for the Poihipi and (to a very small extent) Te Mihi geothermal power station; b. for process water for Otahuhu and Whirinaki thermal power stations. For example, at Whirinaki very pure freshwater from a groundwater bore is injected into the combustion chamber to reduce NOx discharges to air; c. for drilling on the Wairakei, Ohaaki and Taheke geothermal fields. 12. Contact is therefore interested in these proposed amendments from the perspective of a hydro generator and as a geothermal and thermal generator as these forms of generation are all dependent on the availability of freshwater. 13. Contact was a member of the Land and Water Forum (LAWF), both at Small Group and Plenary level. 4

5 Summary of Submission 14. Contact supports many of the proposals. Specific comments in relation to particular aspects of the proposals, and recommendations for further refinement, are made below. In summary, Contact wishes to see: 1. Revision of the national values to provide for electricity generation from geothermal and thermal sources as well as hydro-electric generation and a revised description for hydroelectric generation; 2. Protection of the national interest in security of supply of electricity by prioritising the national interest over other values in situations of competing values; Submission 3. Additional attributes sediment and temperature not included; Chapter 4. Revision 1 identification of the framework of key and issues process and for opportunities the exceptions with regime New to provide Zealand s for resource electricity management generation. system Contact agrees with the analysis that resource management processes are often cumbersome, 15. Contact s comments generally follow the order matters are discussed in the Discussion Document. Footnotes reference particular questions. Submission General 16. In general Contact supports the approach in the Discussion Document. In particular: The establishment of a National Objectives Framework (NOF); Mandatory national values and national bottom lines in respect to those values - ecosystem and human health for secondary contact; The flexibility for regional councils to choose national values for particular fresh water bodies and the attributes to be managed for each of the values (subject to a national interest concern discussed below); The requirement that regional councils account for all water takes and sources of contaminants to inform decisions on the setting of freshwater objectives and limits; The flexibility given to Councils to set timelines to improve quality over time and the acceptance that time frames for improvement may be long; 5

6 The articulation of tangata whenua values for fresh water; The retention of the existing requirement in the National Policy Statement for Freshwater Management (NPS FM) to maintain or improve overall water quality within a region; The science based methodology. 17. Matters over which Contact has concern: The narrowing of the value electricity generation to hydro electric generation; The description of the hydro electric power generation value; The risk to electricity generation if waterbodies whose primary value is electricity generation have other values prioritised; The possible addition of sediment and temperature attributes; The need to recognise an ongoing role for the Courts where the community disagrees on values for water bodies; Protecting the national interest; The exceptions regime. Contact s submission will focus on these matters. Specific Issues and Recommendations Values 1 Additional Values 18. As noted above, freshwater is important not simply for hydro generation but also for electricity generation generally. The way in which Contact relies on freshwater for thermal and geothermal generation, in particular for fundamental activities like drilling and cooling water, is outlined in paragraph 11 above. 19. The National Policy Statement for Renewable Electricity Generation (NPS REG) has as its Objective: To recognise the national significance of renewable electricity generation activities by providing for the development, operation, maintenance and upgrading of new and existing renewable electricity generation activities, such that the proportion of New Zealand s electricity generated from renewable energy sources increases to a level that meets or exceeds the New Zealand Government s national target for renewable electricity generation. 1 In response to questions on page 22 of Discussion Document re Section 4.2 6

7 20. The NPS REG requires decision makers to recognise and provide for the national significance of renewable electricity generation activities, including the national, regional and local benefits relevant to renewable electricity generation activities. 21. The NPS FM, before the amendments proposed in the Discussion Document, had as a national value of fresh water electricity generation. The Discussion Document deletes that value and replaces it in Appendix 1 with hydro electric power generation thus significantly limiting the applicability of the NPS FM. 22. Contact is concerned for two reasons. This creates a conflict with the NPS REG which has a broader national value for electricity generation. Second, not only is electricity generation as a value narrowed in the context of water quality but also in the context of water quantity. While Contact appreciates the amendments to the NPS FM by the introduction of a NOF are directed at water quality that is only a part of the total focus of the NPS FM. Recommendation additional values 2 Retain the first list of values in the Preamble (shown as deleted text in the redline of the NPS FM, page 49 of the Discussion Document) as these values are broader than those directed specifically to water quality issues in Appendix 1; Amend the Table Appendix 1 to add a value for use of water in geothermal electricity generation as follows: Power generation from renewable geothermal water and energy The freshwater management unit provides for use of renewable geothermal resources to provide a reliable and secure supply of electricity. Freshwater of a suitable quantity and quality is available for drilling, cooling and process water purposes and enables continuous drilling operations and the power station to operate at all times, whether to maintain existing renewable electricity generation activities or to support new electricity generation activities. Amend the Table Appendix 1 to add a value for use of water for thermal electricity generation as follows: 2 Discussion Document: Question 11 Section 4.2 7

8 Water used for thermal power stations Freshwater of a suitable quantity and quality is available for cooling and process water and enables a power station to operate at all times. Descriptions of the National Values 3 Value - Hydro electric power generation 23. Contact also considers that the description of the hydro electricity value does not adequately capture the value as it relates to electricity generation. Recommendation revised value Amend the Table Appendix 1 description for the national value - hydro electric power generation as follows (additions underlined): Hydro electric power generation The freshwater management unit (including in combination with other units) has physical qualities that are suitable for power generation as required to provide a reliable and secure supply of electricity where either; The physical qualities, including the continued availability of water (levels, flow and allocation) for existing power generation are retained, maintaining the potential generation output, or The physical qualities, including hydraulic gradient, volume of water, and flow rate, required for new power generation would be retained, and water storage for power generation may also be possible. 3 Discussion Document: Question 13 Section 4.2 8

9 Value Natural form and character 24. The description of the Natural form and character value raises a number of concerns: Natural form and character where people value particular natural qualities of the freshwater management unit Matters contributing to the natural form and character of a freshwater management unit are its visual and physical characteristics that are valued by the community, including its flow regime, colour, clarity, morphology or location. They may be freshwater management units with exceptional, natural and iconic visual features. 25. The inclusion of flow regime as a matter contributing to natural form and character links this value to allocation and flow. Yet existing hydroelectricity infrastructure unavoidably and necessarily alters the natural form and character, that is, the flow regime, of a freshwater management unit. As discussed above, flows in the Clutha are regulated by Contact s hydro generation resource consents. 4 However, a river may be valued for its apparent natural appearance while at the same time being significantly hydrologically altered. If a community chooses to value a waterbody for its apparent natural form and character over its existing hydro electric generation contribution that places at risk the ability to manage that river for hydro generation. For example, a lake (particularly one that appears to be a river), primarily acting as hydro generation storage and created for that purpose, may be valued through this process for its natural character. Depending on the attributes that the regional council then chooses to manage (Policy CA 1 c ii) regional planning processes or consent reviews may follow. The operating range or flow regime may be curtailed as a result to deliver benefits such as visual clarity or reduce exposed beaches. That puts at risk potentially the backbone of New Zealand s electricity system which is hydro generation. 26. A second concern is that it is unclear from this description whether the natural form and character being valued is the waterbody itself or includes the broader landscape through which it passes. The inclusion of location and visual features in the description suggests the latter. If that is the case Contact suggests that this is inappropriate in an NPS relating to water and does not relate to water quality, the objective of these changes. The implications for constraining land use (including private land) also need to be considered if a wider interpretation of location is adopted. 4 Contact has regulated minimum flows below Roxburgh (250 cumecs) and from the Hawea Dam (10 cumecs), a different minimum flow requirement below Clyde daytime to night-time, along with specified flows for trout spawning and to accommodate recreational activities. 9

10 Recommendation competing values Create a default exception for hydrologically altered waterways (discussed below in the context of the exceptions regime) or amend the reference to flow regime with the following addition: And - Matters contributing to the natural form and character of a freshwater management unit are its visual and physical characteristics that are valued by the community, including its flow regime (other than where the flow regime is artificially controlled as part of a hydro electric power scheme), colour, clarity, morphology or location. They may be freshwater management units with exceptional, natural and iconic visual features. Delete location and clarify that visual features refers to water features (waterfalls, whitewater rapids etc) or otherwise limit the extent to which landscape may be taken into account in valuing a particular waterway; or Create a priority for the national interest when selecting values (see discussion commencing at paragraph 46 below). Objective B4 and Outstanding freshwater bodies definition 27. The proposed changes to Objective B4 (in the Water Quantity section of the NPS FM) and the definition of Outstanding freshwater bodies increase the risk that water bodies managed primarily for hydro generation will be afforded natural value priority. Regional Councils are now required to protect outstanding fresh water bodies whose values are identified through the definition as including ecological, landscape, recreational and spiritual. Policy B1 then requires every regional council to set environmental flows and/or levels. Recommendation balancing natural value Amend the definition of Outstanding freshwater bodies by adding to the outstanding values list hydro electric generation. Attributes 28. Contact considers that the appropriate attributes have been included. 29. Contact is concerned by the indication in the table on page 21 of the Discussion Document that potential attributes for inclusion in are sediment and heat. 10

11 Sediment 30. The logic underlying the inclusion of the current set of attributes is: Central government development of the nationally-applicable technical and scientific aspects of linking values with freshwater objectives is more efficient than councils repeating the same work in each region. For example, the water quality attributes that would enable safe swimming are the same in every region. Incorporating these technical aspects into the NPS-FM would reduce debate and litigation of the science underpinning freshwater objectives in plans Contact agrees. However, this is not true of sediment which is waterway specific and controls are best set regionally as is currently the case. Further, sediment is frequently robustly controlled through resource consent conditions which are designed to match the catchment specific circumstances. That is appropriate. 32. For example, Contact has resource consents that provide for the disturbance, extraction and discharge of sediment in the bed of the Manuherikia River and the bed of Lake Roxburgh to manage the flood risk at Alexandra. Flood risk management is achieved using excavators and earthmoving equipment in the Manuherikia River. At Lake Roxburgh the lake level at the Roxburgh Dam is lowered in anticipation of high inflows (over 850 cumecs) that then scour sediment out of key areas of the lakebed. Temperature 33. Setting a national standard/limit for temperature as an attribute is equally problematic. For example, Contact doubts that it is possible to set a national attribute state that accounts for the situation specific temperature influence in the Waikato River from natural and extremely hot geothermal discharges from the geothermal fields in the central North Island. 6 Further, in Contact s experience, a nationally set limit for the attribute is unnecessary as the resource consent process again deals well with specific situations. 34. For example, Contact has temperature controls on all geothermal and thermal discharges of water to water. These are expressed as a limit on the number of degrees by which the ambient river temperature may be raised by the discharge and/or as a temperature limit on the fully mixed river temperature after discharge. Such an approach automatically takes account of season temperature variability in ambient temperature and is designed for and therefore appropriate to the particular water body. 5 Discussion Document: page 10 6 In the context of Wairakei reconsenting, the natural discharge of geothermal fluid to the Waikato River was accepted as 23,000 tpd. 11

12 35. Further, finding a one size fits all is particularly difficult for temperature because it must account for the circumstances that exist on our most developed waterways. For example, in the context of reconsenting the Wairakei Geothermal Power Station, the Environment Court allowed the continuation of some discharges of both separated geothermal water and cooling water/steam condensate to the Waikato River The approach the Court took was to impose conditions which required Contact to reduce the contaminant loading and therefore the adverse effects of the continuing discharges over time 8 including a step change reduction in the hydrogen sulphide in the cooling water discharge designed to ensure an acceptable in-river concentration after mixing within five years. 37. The obligation to reduce the hydrogen sulphide discharge required Contact to find an innovative engineering solution and resulted in the world s first bioreactor plant, now commissioned and operational at Wairakei and costing some $30m. The bioreactor uses sulphur-oxidising bacteria to reduce the levels of hydrogen sulphide by pumping the used cooling water through 378km of pipes under a field next to the power station. Inside the pipes, the bacteria absorb the hydrogen sulphide from the water, removing up to 80 per cent of it before the cleaned water is returned to the Waikato River. 38. However, a certain temperature needs to be retained in the water for the biological system which absorbs the H 2 S to work. Too low and the bacteria die. Any standardised temperature attribute state on the Waikato River has the potential to make the bioreactor redundant to no good environmental purpose. Apart from the sheer inefficiency of such an outcome, a more serious environmental issue, H 2 S discharges, would remain. 39. In Contact s view, temperature should remain an attribute addressed by Regional Councils, frequently creatively, rather than being addressed nationally. 7 Wairakei was a 50 year old plant and while efficiently continuing to generate baseload electricity for New Zealand it was built on old technology that involved river discharges. Had this been a new plant advances in technology would have meant that the discharges would have been reinjected to the reservoir or outfield (or spray irrigated). Ceasing the Waikato River discharges completely was not technologically feasible. 8 Consent (SGW discharge) and (cooling water discharge) 12

13 Recommendation - additional attributes The water quality attributes sediment and temperature should be accepted as not appropriate for inclusion in national attribute state tables but rather continue to be dealt with at a regional level. Process for Freshwater Objective Setting In relation to freshwater objective setting the Discussion Document invites comment on whether the process outlined will work. Contact is particularly interested in the role that collaboration might play. 41. Contact agrees that national direction is necessary and supports nationally set parameters based on good science. The science should not be debated and duplicated by Councils. Contact also agrees that National Direction supports good decision-making and clear accountabilities. Without national direction, there is a risk that councils may make decisions that provide insufficient protection for environmental or cultural values, or alternatively may make overly conservative decisions (limits set which unnecessarily constrain economic growth and development) Contact is less confident that this national direction will provide sufficient guidance for community decision making via collaborative processes so that the Courts will no longer be needed. 43. By and large the Courts have not been asked to decide the science (that is, to decide between experts) but rather to make a call on an issue or value that the science informs. So, for example, the Court has been needed to set the allocation limit for abstraction from the Waikato River because the community could not agree on what value it placed on the existing hydro generation on the River as opposed to making more water available for other uses or values The Discussion Document notes that regional discussion will focus on community values and the impact of decisions. In Contact s view there will be occasions when the community is required to choose between values and the choices will be disputed. The Courts exist to resolve disputes and objective third party decision making in such a situation is appropriate. 45. Contact is supportive of collaborative processes, and is a current participant in a number, but considers that it is unrealistic to believe that the Environment Court will no longer be required to play a role given the enormous challenges of competing water values. 9 Discussion Document: Question 20 Section Discussion Document: page 8 11 Variation 6 Waikato Regional Plan 13

14 Recommendation collaborative process Retain the option of the schedule one process in relation to water decision making and not overstate the ability of collaborative processes to deliver consensus on values. CA1 Objective and Policy 46. The NOF sets a number of national values which Councils may choose among. Objective CA1 provides for recognition of regional and local circumstances. The language is permissive other than for the compulsory values (e.g. Policy CA1 b. ii). The Discussion Document explains: Appendix 1 of the proposed NPS-FM also sets out additional values, including tangata whenua values that must be considered for managing fresh water. Communities could choose to manage their water bodies for these values, but they would not be required to While CA1 f. v provides for consideration of economic implications and investments this is one matter among many. Nowhere is there any obligation to consider, or provide for, the national interest. The preservation of existing hydro generation capacity is such a matter Contact is concerned that a community process focused on regional and local circumstances (Objective CA1 b) may well choose not to value a waterway for its contribution to the national interest. That is, to meeting New Zealand s demand for electricity as opposed to meeting local demand for water or some other value such as recreation. 49. As already noted, Council may choose to initiate plan changes or consent reviews as a result. Only if a water management unit will fail a compulsory bottom line will it qualify for an exception. In the case of the Clutha, under the exceptions regime as it is proposed (discussed below), bottom lines are unlikely to be breached so the Clutha scheme would not qualify for inclusion in Appendix Contact also notes that the risk that the national interest will be overlooked is compounded if decisions are being made through a collaborative process without the back up of appeals to the Environment Court to address any imbalance. 12 Discussion Document: page As already noted, a community may choose natural form and character as a value on a hydro-electric generation waterbody. 14

15 Recommendation national interest Amend Objective CA1 by the addition of: c. provides for the national interest ; and Identify matters that are in the national interest and provide that any value choice must demonstrate that national interest values are met; or Recognise all hydrologically modified catchments in the exceptions regime; or Make electricity generation a compulsory value. Exceptions to national bottom lines 51. Contact supports exceptions for significant existing infrastructure but the framework is problematic and the process for defining exceptions is unclear. Framework 52. It is intended that exceptions apply only to those waterways that do not meet bottom lines for the compulsory values. As indicated in this submission, there are a number of problems for hydro generation in the framework proposed in the NOF but the waterway itself may not breach a bottom line. As the Discussion Document acknowledges, the quality of most water bodies is already above the proposed bottom lines. 14 The exceptions regime is therefore unlikely to address the concerns raised in relation to electricity generation. This is particularly the case as the Discussion Document only anticipates difficulties in the context of hydro generation and only in the context of dewatered stretches of river Further, as the development of the NOF will be incremental, with more attributes to be added, it is very difficult to anticipate now whether an exception will be required in relation to a future bottom line and how achievable that might be. Process 54. The process of applying for and obtaining an exception is not clear in the Discussion Document. It seems that hydro generation scheme exceptions are expected to be decided by Government but after a process involving public consultation. Potentially, electricity generators could be applying to their regional council as part of a regional planning process for an exception with a full schedule 1 RMA Act process applying. The exception sought is quite likely to duplicate the consideration the Council has already given the environmental issues in the context of granting resource consents and imposing conditions for infrastructure. 14 Discussion Document: page The statement is repeated in similar terms at page Discussion Document: page 27 15

16 55. In Contact s view it is not appropriate that significant infrastructure, vital to the security of New Zealand s electricity supply, be put through either process. The LAWF considered this issue in very close detail. It acknowledged: These nationally important uses of fresh water and their impact on waterbodies have been considered in public planning processes and are often subject to complex conditions as part of their resource consents. These conditions are in turn subject to review as well as full reconsenting processes throughout the extended lifetime of the infrastructure Recognising this, LAWF recommended a use layer within a waterbody classification system that would deal with the hydro-dam class (for example) as a different problem from setting objectives for the general class of rivers in which the hydro-dams are situated That is, LAWF concluded that a general exception needed to be made for electricity generation. Contact supports that approach. Taking electricity generation infrastructure out of the NOF framework altogether would address the issues raised in this submission and would be appropriate for a matter so directly in the national interest and which is itself not a contributor to water contamination. Recommendation exceptions regime Identify and make a general exception in Appendix 3 without further public process of electricity generation schemes in hydrologically modified catchments with an appropriate policy added to section CA; and Add a new policy to section CA as follows (or similar): 16 Second LAWF Report: Setting Limits for Water Quality and Quantity, Freshwater Policy and Plan Making through Collaboration, paragraph Ibid, paragraph

17 Policy CAX By Appendix 3 including any freshwater management unit within which there is nationally significant hydroelectricity generation infrastructure, which makes a significant contribution to: 1. the average annual production of electricity ; 2. electricity security of supply; and 3. the achievement of renewable energy targets. This takes into account that the infrastructure: i. has resulted in a high level of hydrological modification, which in turn has modified the environment; ii. enables economic benefits that are regionally or nationally significant; iii. is subject to an existing environmental management regime including mitigation measures that have been established through participatory public processes. Or - If failure to meet bottom lines is to be retained as the grounds for exception, include in Appendix 3 those water bodies (or management units) that cannot meet the bottom lines defined in the NPS owing to these water bodies having been modified by the location of significant electricity generation infrastructure; and Provide a streamlined process for the addition of further exceptions to the NOF for nationally significant infrastructure where activities are no longer able to meet bottom lines as a result of new attributes being added to the NPS as follows: o Applications made to and processed by the EPA; o Decisions made by the Minister of the Environment on the recommendation of the EPA; o Approved exceptions included in the NPS Appendix 3 by notice in the New Zealand Gazette. 58. Contact s firm preference is for the approach in the first two bullet points of this recommendation. 17