A submission by Meridian Energy Limited on. Clean Water Proposed amendments to the National Policy Statement for Freshwater Management 2014

Transcription

1 A submission by Meridian Energy Limited on Clean Water 2017 Proposed amendments to the National Policy Statement for Freshwater Management April 2017

2 Submission Meridian Energy submits: 1. In support of the stated intention to make it clear that community economic well-being is to be considered by decision makers before and when making freshwater decisions, particularly as it relates to national values and uses in Appendix 1. However, Meridian submits that the proposed amendments to A. Water Quality, B. Water Quantity, AAA. Te Mana o te Wai, Policy CA2(f)iaaab and Appendix 1 to the National Policy Statement do not achieve this intention. The amendments proposed in Clean Water 2017 subordinate economic matters to ecological and Te Mana o Te Wai values. That approach is inconsistent with the Government s intention to make clear that regional councils must consider the community s economic well-being when making decisions 1 and the balance of enabling and protecting factors inherent in the notion of sustainable management in Section 5 (Purpose) of the RMA. The approach is also inconsistent with recommendations in Land & Water Forum reports to incorporate economic and environmental issues equally in freshwater limit setting and water management. Coupled with the failure to populate Appendix 3, the changes result in devalued consideration of economic well-being compared to the 2014 National Policy Statement National Policy Statement. Meridian Energy submits: 2. In support of the revised wording of Policy CA3. Meridian supports the decision not to include an ad-hoc set of exceptions criteria and intervention in local planning process as was suggested in the 2016 Next Steps discussion document. The revised wording of this policy proposed in Clean Water 2017 now makes it very clear that listing infrastructure in Appendix 3 does not confer an automatic exemption or exception. Rather inclusion in Appendix 3 allows regional planning processes to set freshwater objectives below national bottom lines if it is considered the best solution after a full evaluation of all values, options and evidence. The limitation to infrastructure in existence at 1 August 2014 is an appropriate limitation. Meridian Energy submits: 3. That the Manapouri and Waitaki power schemes must be included in Appendix 3 through the current process. Considerable discussion of options and evidence about the need to populate Appendix 3 has been provided through submissions on the 2013 and 2016 discussion documents. Existing breaches of periphyton bottom lines in the Waitaki and Manapouri catchments coupled with changes now proposed as part of Clean Water 2017 to apply swimability attributes to every 4 th order river (Tekapo, Pukaki, upper and lower Ohau rivers) and a mandatory MCI measure 1 Clean Water 2017 page 20. 2

3 (with a trigger for improvement at a score of <80) increase the urgent need to populate Appendix 3 for these two power schemes. The schemes are ecologically and hydraulically unique. The catchments are the largest and second largest hydroelectric catchments in New Zealand together they account for more than half of all New Zealand hydro-generation output, approximately 25% of total New Zealand renewable electricity generation and more than 65% of New Zealand s controllable hydro-storage which is critical to security of supply. The lower bound costs of potential change in flow regimes at Manapouri and the Waitaki has been independently assessed in reports commissioned by the Ministry for the Environment. Concept Consulting 2 assess the net present value cost of flow changes in the Waitaki at Tekapo and Pukaki rivers as being is a range between $159.3 M to $494.1 M; the net present value cost of flow changes in the lower Waiau river at Manapouri is in the order of $683.8 M. Energy Modelling Consultants 3 have also assessed a limited set of scenarios and have identified significant costs associated with a loss of hydroelectric capacity in the Waitaki catchment at the Tekapo and Pukaki rivers resulting in increased CO 2 emissions and sustaining increase in the short run marginal cost of electricity. Those costs were described by the report authors as being lower bound estimates. Ongoing delay in the populating of Appendix 3 is creating uncertainty in how the National Policy Statement is implemented at the regional scale and increases all parties costs of implementing the National Policy Statement. The manner in which the National Policy Statement should be changed to give effect to Meridian s submission is set out in Appendix 1 to this submission. Evidence and submission directly relevant to these issues has been provided previously by Meridian: Submission of Meridian Energy, 4 February 2014 Sworn Evidence of Hamish Cuthbert, 4 February 2014 Sworn Evidence of Mark Richard James, 3 February 2014 Sworn Evidence of Sarah Margaret Dawson, 3 February 2014 In support of this submission Meridian includes a further sworn evidence of Mark Richard James, dated 27 April Further detail of these matters is set out in the section that follows. 2 Concept Consulting: Evaluation of potential electricity sector outcomes from revised minimum flow regimes on selected rivers. Prepared for the Ministry for the Environment, Version 1.1, 19 July Downloaded from Combined values for Waitaki_Meri and Waitaki_Tekapo Figure 1 page 6. 3 Halliburton T (2015) Assessment of the Impact of Flow Alterations on Electricity Generation. For The Ministry for the Environment and Ministry for Primary Industries, 13 Mar5ch 2015, Energy Modeling Consultants Ltd. Scenario 2, Figure 1 and Figure 3. 3

4 Explanation Need to provide clarity on how to consider community economic well-being Meridian Energy supports the Government s intent, as recorded in the discussion document, to amending the Freshwater National Policy Statement to make it clear that regional councils must consider the community s economic well-being when making decisions about water quantity, deciding what level or pace of water quality improvements will be targeted, and when establishing freshwater objectives. The proposed additions to A. Water Quality, B. Water Quantity, AAA. Te Mana o Te Wai, Policy CA2(f)iaaab and Appendix 1 of the National Policy Statement do not achieve this. Currently, these changes give relative priority to natural, ecological and Te Mana o Te Wai freshwater values over the economic use of freshwater. The National Policy Statement potentially would direct regional councils to place a lesser weight on the economic well-being dimension of freshwater when setting freshwater objectives. Meridian submits that to give full effect to the Government's intent four improvements in the expression of the National Policy Statement must be made which achieve the following: 1. Even handed consideration of economic well-being over a wider ambit of water quantity and quantity objectives, including safeguarding (Objective A1 and B1), quality (Objectives A2 and A3) and over-allocation (Objective B2). It is counterintuitive to allow consideration of economic factors to be limited to one water quality and one water quantity objective only. 2. The consideration of national values as part of Te Mana o Te Wai with no priority being accorded between the Compulsory and Additional national values within Appendix The removal of the priority given to environmental limits in Policy CA2(f)iaaab, at least for matters included within Appendix Recognise that hydro-electricity power generation is not extractive, and all national values must be expressly on an equal footing, within Appendix 1. The relative weight of national values in specific cases should then be determined catchment-by-catchment according to the facts and circumstances applicable. Need to provide consistency and clarity on national interests The purpose of national policy statements is to state objectives and policies for matters of national significance that are relevant to achieving the purpose of the Resource Management Act. Freshwater is one such matter of national significance. However, so is: a) the need to develop, operate, maintain and upgrade renewable electricity generation activities throughout New Zealand; and b) the benefits of renewable electricity generation 4 Hydro-electricity generation, and the benefits of such generation to New Zealand, and freshwater are intrinsically linked. To be effective, national direction on these two matters must be coherent and guide regional councils function of integrated management of natural and physical resources under the Resource Management Act 5. 4 National Policy Statement for Renewable Electricity Generation Section 30(1)(a) of the RMA 4

5 Section 7 (i) and (j) requires all decision makers under the Resource Management Act (including the Minister in respect of a National Policy Statement) to have particular regard to: (i) the effects of climate change: (j) the benefits to be derived from the use and development of renewable energy. Failing to recognise the Manapouri and Waitaki catchments in Appendix 3 in the context of the evidence of breaches of the National Objectives Framework, the scale of those hydroelectric schemes and the corresponding costs would be a failure to achieve the requirements of the Act. Government s intent to set direction for freshwater is set out in the preamble to the National Policy Statement the Crown recognises there is a particular need for clear central government policy to set a national direction, though the management of the resources needs to reflect the catchment-level variation between freshwater bodies and different demands on the resource across regions. Decisions on hydro-electricity generation involve at least four matters of national interest: Freshwater quantity/quality (National Policy Statement for Freshwater 2014) Renewable energy generation (National Policy Statement for Renewable Electricity Generation 2011) and government's target for 90% renewable energy by Lake levels in nationally iconic lakes for example, Te Anau, Manapouri 6, Tekapo, Pukaki and Ohau Biodiversity enhancement packages many of which are associated with endangered species protection and involve the Department of Conservation. For example, Project River Recovery, Waiau Fisheries and Wildlife Habitat Enhancement Trust, and Te Waiau Mahika Kai Trust. Policy CA3, as proposed in Clean Water 2017, provides clearer national direction on how regional councils are to consider existing significant infrastructure when setting freshwater objectives. It provides the means for this national direction on, amongst other matters, the integration of freshwater and hydro-electricity generation management. However, it falls short of providing any workable direction while Appendix 3 remains empty. In short to be effective and coherent Appendix 3 must be populated. Recognise the importance of hydro-electricity generation from Manapouri and Waitaki power schemes to New Zealand Meridian Energy submits that in the context of the Manapouri and Waitaki power schemes within the Southland and Canterbury regions respectively there is a very clear rationale and extensive information upon which to recognise their national importance by listing those schemes within Appendix 3. The 2016 discussion document states that New Zealand derives huge environmental, economic and social benefit from hydro-electricity generation. In 2014, about 57% of our electricity was generated by hydro-electric power schemes. Almost 80% of New Zealand s electricity is generated from 6 The Manapouri- Te Anau Development Act 1963 provides a process for amending the lake operating guidelines. The 'Guardians of Lake Manapouri, Monowai, and Te Anau', are responsible for monitoring and overseeing lake levels and advising the Minister of Conservation on appropriate lake levels. 5

6 renewable sources; hydro-electricity is pivotal to the Government s goals of increasing renewable electricity generation to 90 per cent by 2025 and transitioning to a low carbon economy. The Manapouri and Waitaki power schemes are of national significance in the context of New Zealand s electricity generation and transmission system. They comprise critically important infrastructure contributing directly to New Zealand's economic and social well-being and development. Together the two schemes account for over half of New Zealand's hydro-electricity generation, and over 25% of New Zealand s total renewable electricity generation. Both schemes are expressly recognised as nationally significant in the Regional Policy Statements for Southland and Canterbury. It is not just the generation capacity of the Manapouri and Waitaki power schemes that is important to New Zealand s electricity system. The resilience of our electricity system has a strong dependence on hydro-electricity storage. On a day-to-day basis, hydro power stations tend to be more controllable and more flexible than other generation technologies and therefore more able to respond to short term changes in market demand as it changes throughout a day, contributing proportionally more to periods of peak demand, and in response to wholesale market conditions. The Manapouri and Waitaki schemes represent approximately 65% New Zealand s controllable hydro storage. The generation assets within the Waitaki and Manapouri catchments are subject to extensive resource management controls on the way that they operate so as to ensure the appropriate provision for these national values and maintaining and protecting local values in the catchments. These controls and mitigation packages have been developed over decades via multiple legislative and planning processes involving Meridian and its predecessors, central and local government, iwi, and community stakeholders, and with the benefit of extensive scientific information from leading experts. The effective management of these catchments to achieve multiple objectives including efficient renewable electricity generation, economic uses in aquaculture, agriculture, tourism and mahika kai and also maintenance and enhancement of ecological, cultural and community values is currently being achieved. The costs of changes in the regulatory parameters of the hydro schemes have been assessed by Concept Consulting 7 and Energy Modelling Consultants Ltd. 8 In Meridian s view and as noted by the report authors, the cost figures presented in both reports provide a lower bound to expected system costs. Concept Consulting found that for the Waitaki Power Scheme increasing flows at Tekapo and Pukaki rivers by 10%, the 25 year NPV cost was calculated as $159.3 million; a 40% increase at a cost of $494.1 million. This cost evaluation did no assess changes in flows in the upper and lower Ohau River. For the Manapouri Power Scheme, the cost of setting minimum flow at 40% of the natural 7- day mean annual low flow (i.e. in the Lower Waiau) would be $683.8 million NPV. Energy Modelling found that changed flows into the Tekapo and Pukaki Rivers (Scenario 2) results in a New Zealand wide loss of hydro-electricity generation, substituted by non-renewable electricity generation, which in turn leads to a sustained increase in the short run marginal cost of wholesale electricity and an increase in CO 2 emissions. These demonstrate the significance of the impact of regulatory changes, particularly those that would lead to changes in minimum flows or requirements for flushing flows. 7 ibid 8 ibid 6

7 There is no rationale apparent from the National Policy Statement Draft Regulatory Impact Statement or Section 32 Evaluation Report that these current lawful operational regimes should be foreclosed for reasons of the national significance of swimming, periphyton or MCI being given priority over the national significance of hydro-electricity generation. To the contrary, it is recorded in these documents that the aim is enable regional councils and their communities to balance the benefits of national bottom lines with those provided by infrastructure 9, including renewable energy production which is specifically referenced. Reduce uncertainty and increasing efficiency of regional planning There are compelling reasons relating to timing and certainty which dictate that inclusion of the Manapouri and Waitaki catchments in Appendix 3 as part of the current amendments is the most appropriate course to follow. Inclusion of nationally important hydro-electricity infrastructure in Appendix 3 does not undermine the approach of the proposed reforms an approach which Meridian generally supports. The Manapouri and Waitaki catchment are highly modified and on a scale that is self-evidently differentiated on that basis from the majority of New Zealand s catchments. The fact that the two catchments are New Zealand s largest and second largest hydro catchments is also a major differentiator. Unless Appendix 3 is populated, the current National Policy Statement amendment will result in planning processes having to give effect to the National Policy Statement, ahead of knowing whether a given set of infrastructure would be included. The 2016 discussion document Next Steps proposed an alternative which was to enable regional councils or owners of significant infrastructure to seek exceptions based on evidence gathered during the limit-setting process where a need has been identified. The alternative of including infrastructure if and when a local planning process concludes that an exemption to the national bottom lines is necessary is a very poor option. It is wasteful and inefficient of the costs, effort and time of all parties in the local planning process where clarity about what is the proper scope for consideration is much more helpful at the time of the planning process. What is now proposed but with an un-populated Appendix 3 risks requiring regional councils to include suboptimal or ultimately inappropriate provisions in regional plans which will then need to be changed to reflect a subsequent decision by the Minister to list infrastructure in Appendix 3. The way this subsequent change will be made, the timing of it, and what happens in the meantime are all critical matters that the current process leaves unanswered. It is backwards looking at a time when regional councils and all participants in major planning processes require the guidance provided by a populated Appendix 3. In this regard - not populating Appendix 3 is a pre-determination that local flow changes to achieve National Objectives have to be made, whereas populating Appendix 3 does not pre-determine the local outcome but does allow for a proper consideration. It is important to note again that inclusion of infrastructure in Appendix 3 does not relieve regional councils from the requirement to promote the sustainable management of the freshwater resource via regional plans, it simply provides for integrated management of the relevant physical and natural resources affected. Nor does it relieve regional councils from the requirement to give effect to the National Policy Statement, nor does it confer an automatic exemption from national bottom lines. It merely makes it lawful for regional councils to set freshwater objectives for compulsory values below national bottom lines where those bottom lines are not met because of infrastructure listed in Appendix 3. 9 Section 32 Evaluation report, pg. 25, Draft Regulatory Impact Statement, para 53. 7

8 By way of illustration, the section 32 evaluation by Environment Canterbury to support recent changes to the proposed Land and Water Plan notes that Appendix 3 is not populated and that Environment Canterbury will "consider the implications of any listing in Appendix 3 if and when any change to the NPS-FM takes effect". This plan change introduced water quality controls in the Waitaki 10 catchment but did not address environmental flow requirements which must still be done to implement the National Policy Statement before The current resource consents for the operation of the Waitaki Power Scheme expire in 2025 and replacement consent applications must be lodged no later than October 2024, therefore the immediate RMA planning phase is critical to the infrastructure. Recognise the evidential basis for listing the Manapouri and Waitaki powers schemes Evaluation of the National Policy Statement amendments have incorrectly stated that there is no evidence to demonstrate the schemes are contributing to water quality that is below national bottom lines 11. Previously Meridian Energy has provided sworn evidence of breaches of the bottom lines in both the Manapouri/Waiau and Waitaki catchments 12. The link between flow regimes and the water quality attributes in the National Objectives Framework has not been evaluated in either the section 32 for the National Policy Statement or in any regional planning processes in either the Manapouri/Waiau or Waitaki 13 catchments to date. By not making this connection, all evaluations to date have missed one of the major risks of not populating Appendix 3. The proposed National Objective Framework, at face value and in the explanation in the discussion document, appears to address only water quality matters, and all of the impact assessments (cost/benefit) are based on water quality. Sensibly, the National Policy Statement requires integrated management of water quality and quantity. Many of the values for which freshwater objectives must be set, are ultimately affected by water quantity. Policy B1 means that not only freshwater quality limits, but also environmental flows and/or limits must be set to achieve the attribute states set out in the National Objectives Framework. Meridian Energy supports this principle of integration but is concerned that the links to environmental flows have not been made in impact assessments. Because of the scale of both the Manapouri and Waitaki power schemes, there is potential for releases of water into downstream waterways specifically to flush periphyton or to dilute contaminants. Meridian is not philosophically opposed to providing flushing flows. In the Waiau River, Meridian already has a voluntary comprehensive Flow Management Plan in place to monitor and manage nuisance periphyton and ensure the health of the river is maintained. Furthermore Meridian is implementing flushing flows agreed at the local scale for the Lower Waitaki River. However the National Policy Statement without consideration of Appendix 3 would direct flow changes to achieve National Objectives on an unfettered scale irrespective of any consideration of a loss in other national values/interests such as lake levels and renewable electricity generation. Not only does this put other national values at risk, but there could be a situation where the cost of 10 Recent plan changes by Environment Canterbury have only addressed water quality issues in the Waitaki catchment. Flow regimes and the corresponding need for related FMU scales were not considered or changed as part of the current Environment Canterbury process. 11 Draft Regulatory Impact Statement : Proposed Amendments to the National Policy Statement on Freshwater Management 2014 Jan 2017 Paragraph Sworn Evidence of Mark James attached to Meridian s submission to the consultation on the Proposed Amendments to National Policy Statement for Freshwater 2011, dated 3 February Environment flows are set in the Waitaki Catchment Water Allocation Regional Plan (2005) and will be reassessed either a part of a plan review or in re-consenting of the Waitaki Power Scheme (2025). 8

9 adverse impacts is transferred to a party that has not been the primary cause of the adverse water quality. That would be an unprincipled and unwarranted approach. In the case of the Waitaki and Manapouri catchments it is only Meridian that is able to deliver altered flows in much of the catchments. The flushing flow example further demonstrates the case for populating Appendix 3 now, so that flushing flow and other environmental flow requirements can be appropriately assessed in combination with other national values at the regional/catchment level taking all relevant factors in to account. The proposed amendments to the National Policy Statement by virtue of Policy A5 requiring all large rivers and lakes to be suitable for full immersion, poses particular problems for the diverted rivers in the Waitaki catchment. Policy A5 applies to individual rivers, not as a requirement for achievement at a Freshwater Management Unit scale. The consented hydroelectric activities for the Waitaki Power Scheme means that the upper portions of the Tekapo river and the Pukaki and Lower Ohau rivers are fully diverted and dry for prolonged periods, unless water is spilled at high inflows. The minimum flows in these rivers were not changed from the currently consented levels by the Government appointed Waitaki Catchment Water Allocation Board in its 2005 Regional Plan. The Ministry for the Environment swimability maps identify these rivers as excellent for swimming. This is a situation where the National Policy Statement would be interpreted as directing flows in these rivers in order to provide for the swimming National Objective Framework values. A mandatory requirement for regional councils to monitor macroinvertebrates is being required by Policy CBaa ii. Meridian Energy understands that it is under consideration to introduce a trigger for mandatory improvement if an MCI score is <80, at which levels a management action plan is required to increase the MCI score. A score of >80 is not achievable in the Tekapo, Pukaki and Ohau (Upper and Lower) rivers without significant changes in consented diverted flow regimes. Further, even if flow changes were made, these rivers are likely to become didymo dominated habitat and as such an MCI score of >80 still is unlikely to be achievable. If a MCI trigger is introduced it is even more imperative that Appendix 3 is populated. Avoid repeating the debate every time new attributes are added to the National Objectives Framework. It is anticipated that the National Objectives Framework will be further populated over time. This in itself provides low certainty and confidence to any party participating in a water planning process. It is particularly problematic for the Waitaki and Manapouri power schemes given the failure to reasonably factor costs of current attributes on hydro-electric infrastructure and report on the costs impacts in section 32 analysis and advice regarding policy development. Caution needs to be had to including further standardised water quantity limits, as the diversity of water bodies means that a one-size-fits-all approach is very unlikely to be appropriate. Unless Appendix 3 is populated, the analysis of any National Objectives Framework additions must rigorously test the impact on New Zealand s hydro-electricity system of any flow related attributes. Sediment for example is being considered as a new National Objectives Framework attribute. Sediment in the Waitaki catchment is highly unique given the existence of high levels of suspended glacial flour sediment in the catchment waterbodies. As has been repeated stated changes to existing flow regimes in the Waitaki and Manapouri catchments (if they are not listed in Appendix 3) will have significant impacts on hydro generation. Meridian supports a principled National Objectives Framework that addresses the problem of declining water quality, but does not transfer the costs of doing so to other parties, or has 9

10 unintended adverse impacts on already regulated and validly authorised activities. Providing for listing in Appendix 3 now would avoid the necessity for repeated debate on matters which independent advice shows should already have been acted upon. Recognise the considerable and adequate evaluation of Appendix 3 options has already occurred Considerable discussion on Appendix 3 has occurred with the Minster, officials and through the two consultation documents over four years. All these discussions led Meridian to the conclusion that the renewable electricity generation from the Manapouri and Waitaki power schemes is nationally important and this must be appropriately considered when setting fresh water objectives under the National Policy Statement. The continued non-population of Appendix 3 flies in the face of this understanding. The 2013 Consultation Document proposed a government will decide on a specified list approach based on practicalities and on economic benefits. Many submitters supported the intent of the proposal but stressed that Appendix 3 should be used sparingly. The 2013 Consultation Document also stated "There will be further consultation on the specifics of what is included in Appendix 3 before the National Policy Statement-FM is amended to include them, possibly in Two independent assessments reports prepared for the Government have demonstrated the scale of potential impacts to be large 14. The 2016 Consultation Document Next Steps outlined a very different approach and asked what evidence councils or infrastructure owners needed to provide to justify being listed in Appendix 3. The document mooted a set of information requirements for exceptions. It then acknowledged that councils will gather this information as part of limit setting under the National Policy Statement, and proposed that regional councils or infrastructure owners could seek exceptions based on evidence gathered during the limit-setting process where a need has been identified. Meridian opposed this approach and is pleased it is no longer being considered. Listing in Appendix 3 is not an automatic exception or exemption. Listing in Appendix 3 extends the spectrum of possible outcomes to include Bands A D, and it will only be Band D where that is justified and appropriate based on evidence, after a local planning process has considering all submissions and after consideration of all matters relevant under the RMA. All parties have significant opportunity to participate in robust regional planning or re-consenting processes which must be publicly notified 15. The draft Regulatory Impact Statement and Section 32 analysis for the current amendments fail to adequately recognise the above, and as such provide inadequate assessment of options for Appendix 3. The Section 32 analysis does include the option of listing specific hydroelectricity generation infrastructure. It then discards this option because analysis did not identify any instances 14 Concept report Evaluation of potential electricity sector outcomes from revised minimum flow regimes on selected rivers prepared for the Ministry for the Environment in July 2013, and the March 2015 Assessment of the Impact of Flow Alterations on Electricity Generation by Energy Modelling Consultants prepared for the same. 15 Public notification of the replacement resource consent application for the Waitaki Power Scheme is required by controlled activity Rule 15A in the Waitaki Catchment Water Allocation Regional Plan and controlled activity Rule 5.125A in the Canterbury Land and Water Regional Plan. 10

11 where an exception would be needed and so would justify listing infrastructure in Appendix 3 at this time 16. Meridian submits that for the Manapouri and Waitaki power schemes, this statement is very obviously incorrect. It is submitted that the proper role of the Minister is to identify those limited number of schemes or other infrastructure, where because of their importance and the extent of mitigation and other values that are associated then a wider spectrum of water quality outcomes (Bands A D) can be considered (without predetermination) by the council and community in a plan and re-consenting process having regard to all of the relevant matters under the RMA. This approach supports the general view that inclusion of infrastructure in Appendix 3 would only be used in limited situations and would be decided by the Government. Meridian Energy also submits that populating Appendix 3 for hydro-electricity generation can be achieved as a result of the Clean Water 2017 consultation for the following reasons: 1. Clean Water 2017 proposes to amend Policy CA3, which is inseparable from Appendix 3 2. Populating Appendix 3 is an option specifically considered within the Section 32 analysis 3. The evidence of Dr James, provided as part of this submission, identifies that the proposed swimmability attributes and proposed MCI attributes (if an 80 score becomes a trigger) cannot be met by the Waitaki and Manapouri power schemes, as is presently the case for periphyton. 4. The matter has been subject to extensive consultation over a prolonged period 4 years. 5. No one could claim that they have not been aware of the proposal or that they are prejudiced by a decision to populate the Appendix that has existed for all of that time. 6. No evidence has been provided that contravenes any of the evidence or assertions that warrant listing of the Waitaki and Manapouri hydroelectric schemes. Evidence and submissions provided by Meridian Energy Meridian Energy has provided the following evidence to support the inclusion of the Manapouri and Waitaki power schemes within Appendix 3. Submission on Proposed Amendments to the National Policy Statement for Freshwater 2011, supported by: o Sworn Evidence of Hamish Cuthbert, 4 February 2014 o Sworn Evidence of Mark Richard James, 3 February 2014 o Sworn Evidence of Sarah Margaret Dawson, 3 February 2014 This Submission on Clean Water 2017 Proposed amendments to the National Policy Statement for Freshwater Management 2014, supported by: o Sworn Evidence of Mark Richard James, 27 April Ministry for the Environment, 2017 Section 32 evaluation report for proposed amendments to the National Policy Statement on Freshwater Management 2014 analysis 11

12 Appendix 1: Changes to National Policy Statement resulting from Meridian Energy s submission Policy AAA1 A. Water quality, objectives B. Water quantity, objectives CA National Framework, Policy CA2 Appendix 1: National values and uses for freshwater Appendix 3: Existing infrastructure for the purposes of Policy CA3(b) Amendment Amend as follows: b) local, and regional and national values identified through engagement and discussion with the community, including tangata whenua must inform the setting of freshwater objectives and limits. Within Objective A2, delete the proposed words from and after then and replace with a new Objective A4 as follows: To provide for economic well-being when managing water quality. Within Objective B1, delete the proposed words from and after while and replace with a new Objective B5 as follows: To provide for economic well-being when managing water quantity. Within Policy CA2 f) iaaab, delete the proposed words from and after within Retain Appendix 1 as expressed in the National Policy Statement for Freshwater 2014 Insert: Manapouri hydro-electricity generation scheme Waitaki hydro-electricity generation scheme Purpose Clarifies that Te Mana o Te Wai includes national values Gives effect to the stated intention that regional councils must consider the community s economic well-being before and when making decisions on freshwater Provides appropriate national direction to support regional planning and renewable energy generation 12

13 IN THE MATTER of the Resource Management Act 1991 AND IN THE MATTER of Proposed Amendments to the National Poliq Statement for Freshwater Management for Cle< Water Consultation 2017 AFFIDAVIT OF MARK RICHARD JAMES SWORN Z':\ APRIL 2017

14 I, MARK RICHARD JAMES, SCIENTIST OF WHANGAMATA swear: QUALIFICATIONS AND EXPERIENCE 1 My name is Mark Richard James. 2 I am an aquatic ecologist holding the following degrees, BSc Victoria University, Wellington; BSc (Hons) Victoria University, Wellington and PhD (Aquatic Biology), University of Otago, Dunedin. 3 I have a background in basic and applied research in marine and freshwater ecology and biology with over 30 years experience in research, consulting and over 6 years in management of science organisations. 4 Following two years with the Institute of Nuclear Sciences, Department of Scientific & Industrial Research (DSIR) I was employed in 1982 by the Taupo Research Laboratory, DSIR, then moved to Christchurch in 1992 as a scientist with the National Institute of Water &Atmospheric Research (NIWA). In 1994 I was appointed as a Project Director and led large multi-disciplinary Foundation for Research, Science & Technology (FRST) funded programmes including "Lake Ecosystems". In 2000 I moved to Hamilton to take up the position of Regional Manager with NIWA and in 2002 was appointed as NIWA's Director Operations. In 2008 I retired from this position taking up a brief position as Chief Scientist for Environmental Information before leaving NIWA in late 2008 and setting up as a private environmental consultant and ecotour operator. 5 Since 1982 I have been involved in research on the ecology of freshwater and marine systems. These studies aimed to gain a better understanding of ecological processes in lakes, rivers, coastal and open ocean systems. I have worked in New Zealand, Finland, Denmark, Australia and in Antarctica. My research has been published in over 45 papers in scientific journals and books. These publications have included scientific papers in international journals and book chapters on the ecology of freshwater and marine invertebrates, freshwater management, coastal sustainability as well as the effects of sediments, lake level management, and other anthropogenic activities on aquatic ecosystems. 6 During my 37 years experience I have been involved with Regional Councils, government departments and industry in establishing guidelines for ecological assessments, providing descriptions of freshwater and marine communities and assessments of potential ecological effects for a wide range of projects throughout New Zealand. 7 I carried out research on the Waitaki and Manapouri lakes while working for DSIR and NIWA and since mid-2011 have been working

15 on the Waitaki and Manapouri systems as an independent consultant to Meridian Energy Ltd providing advice, managing science projects and carrying out aquatic investigations. 8 I swore an affidavit on 3 February 2014 for Meridian on the Proposed amendments to the National Policy Statement for Freshwater Management A discussion document, and accordingly am familiar with the subject matter. 9 Notwithstanding that this is not a matter before the Environment Court, in preparing my evidence I have reviewed the code of conduct for expert witnesses contained in part 5 of the consolidated Environment Court Practice Note I have complied with it in preparing my evidence. I confirm that the issues addressed in this statement of evidence are within my area of expertise. I have not omitted to consider material facts known to me that might alter or detract from the opinions expressed. 10 In preparing my evidence I have reviewed: Proposed amendments to the National Policy Statement for Freshwater Management (NPS-FM) Clean Water Published by Ministry for the Environment February 2017 Background reports to MFE for the NPS-FM including Davies Colley et al. 2013, Sneider et al. 2013, Verburg Evidence and reports by James, Sutherland, Norton and Sneider for various resource consent applications to take and use water from the Upper Waitaki Catchment. Various reports and data summaries to Meridian Energy Ltd on water quality in the Waiau and Waitaki Rivers and catchments. SCOPE OF EVIDENCE 11 I have been asked by Meridian to provide evidence on: Periphyton bottom lines and whether waterways of interest to Meridian Energy Ltd (Meridian) would be compromised; and Assessment of whether it is possible to comply with swimmability standards and minimum MCI level in diverted rivers or ones that contain didymo.

16 WATER BODIES AND MERIDIAN'S OPERATIONS Flows 12 A core part of Meridian's business is operation of the Manapouri Power Station (MPS) and a number of hydro stations, dams, canals and other structures in the Waitaki system. The diversion of water is consented for the Pukaki and lower Ohau Rivers to provide storage and flows through canals for hydroelectric production. These diversions result in essentially "dry" river beds. 13 The Pukaki River is virtually dry along much of its length (17 km) with only residual pools in the lowest reaches and intermittently below the Pukaki spillway. Managed spill flows occur for two to three weekend days each summer for white water recreation. 14 The Lower Ohau River which is 12 km long essentially does not flow below Lake Ruataniwha apart from some groundwater and terrace seeps before the Twizel River joins it approximately 2 km upstream of Lake Benmore. There are no recreational releases. Periphyton 15 The invasive Didymosphenia geminata (didymo) was first discovered in New Zealand in the Mararoa/Manapouri Catchment in 2004 and has been spread by fishers and other water users. Unlike other nuisance periphyton, growth and high biomass of didymo occurs in cooler low nutrient waters and can also be associated with lake-fed rivers such as the Mararoa, Waiau, and Ohau thus it does not necessarily reflect poor water quality or naturally productive systems. The Mararoa where it was first found in 2004, and is still an issue today, is not a regulated river. In other words, the proliferation of didymo is not caused by water abstraction or flow regulation, or by land use intensification although these may contribute to higher levels of biomass at times. 16 Periphyton is included in the NPS as one of the key attributes for rivers for ecosystem health. In my evidence submitted in 2014 on the proposed amendments to the NPS-FM (2011) I raised the issue of waterways affected by invasive didymo and the issues with application of the periphyton attribute. I gave evidence that rivers dominated by this species should be either exempt or have modified bottom lines. In the NPS-FM (2014) and the Clean Water (2017) document there is still no recognition or acknowledgement of the unique characteristics or allowance for this invasive species.

17 17 Visual estimates in a side braid of the Ohau River from Jan-Oct 2013 indicate that biomass would have exceeded the NSP-FM bottom line for periphyton continually from Feb-Oct. The main channel may have lower levels of periphyton but could still exceed the bottom limit for long periods. Data from the National River Water Quality Network Programme also indicates that the levels of periphyton in the Waitaki River at Kurow could have exceeded the proposed bottom line on at least 5 occasions for successive months, since 2007 (NIWA, unpubl data). 18 Recent observations of high periphyton standing crop in parts of the Upper Ohau River have confirmed that the "bottom line" for the periphyton attribute of the NPS-FM 2014 and Clean Water (2017) will be regularly breached in the river. The bottom line (i.e., a site or river is allocated to Band D) is defined as exceedance of 200 mg/m 2 chlorophyll a in more than 8% of samples for non-productive class waters. In the 7 samples collected over the last 12 months in the Upper Ohau River 5 have at least one site that breached this bottom line and on three occasions two sites breached this bottom line. 19 The impact of the existing bottom line being applied to the Waiau Catchment, is that on occasion the proposed bottom line would be breached in naturally dry years and some (eg Apr/May 2011). This is because the proposed bottom line for non-productive rivers can only have one exceedance per 12 samplings. An earlier version allowed for up to two exceedances per year and these could not be in successive months. The latest version is even tighter. Macroinvertebrate Community Index (MCI) 20 In my 2014 evidence I expressed concerns about the effect of a MCI in river systems such as the Waiau and Waitaki. While MCI is often a useful indicator of river health there are issues around some naturally different habitats and communities and defining actual thresholds for different conditions and river types. The latest consultation document (Clean Water 2017) has introduced MCI as a mandatory measure of ecological health that regional councils must use to monitor and report on (Policy CB1 aa) ii.). Meridian has asked me to consider the implications of adding a "trigger" for regional councils to develop an action plan to improve MCI if it is below a score of Lake-fed rivers, rivers dominated by glacial flour and ones with diversions and intermittent variable flows are common in catchments where Meridian operates and are good examples where the communities would be expected to be quite different to those that are

18 - - ~ suitable for application of MCI assessment and this would be reflected in the MCI score. Kilroy et al. (2009) found the presence of didymo in several rivers (including Mararoa, Waiau and and Oreti Rivers) was associated with a shift in the macroinvertebrate community to one dominated by oligochaete worms, Chironomid larvae and nematodes and declines in high value species such as mayflies, stoneflies and caddisflies. This community shift has been confirmed by Larned & Kilroy (2014) and by Jellyman & Harding (2016) in a study of 20 rivers. These changes would have a significant impact on MCI and in some cases result in indexes below 80. Thus if 80 was to be implemented as a mandatory trigger for a mandatory action plan to improve MCI many of the sites in these systems would be consistently and unavoidably breaching the NPS-FM requirement through no fault of the hydroelectricity operator. 22 For the reasons above the MCI bottom line of 80 should not be applied to habitats influenced by glacial flour and didymo. If it was to be included then the Waiau River and the Waitaki Catchment should be regarded as exceptions because of unusual turbidity (Waitaki Catchment) and the dominance by didymo which now exists in low nutrient conditions and significantly alters the macroinvertebrate community (Waitaki and Waiau Catchments) (Kilroy et al. 2009). 23 The development of a framework and guidance for communities and Regional Councils and a consistent approach to defining objectives, values, attributes and bottom lines is a positive and necessary move. 24 However, because of the above, I consider that catchments with didymo would not be able to meet the periphyton bottom line and this needs to be accounted for in the NPS-FM. 25 With only intermittent flows or residual pools an MCI could not be measured in the Pukaki River and much of the Lower Ohau River and thus an MCI of 80 could not be applied or achieved. NPS and Swimmability 26 The modified flow regime in the Waitaki catchment, as a result of Meridian's consented activities, means that the upper portions of the Tekapo, Pukaki and parts of the lower Ohau Rivers are dry for prolonged periods, unless water from Lakes Tekapo, Pukaki and Ruataniwha is spilled during flood or high inflows or for recreational releases.

19 A significant feature of the Clean Water (2017) consultation which builds on the NPS-FM (2014) is the addition of a swimmability attribute with a goal of 90% of rivers and lakes swimmable by While I consider this is an admirable goal and an attempt to improve the overall water quality, its application is inconsistent and inappropriate as proposed. The main issue I see and one that would have a significant impact on Meridian and its ability to generate electricity under it's resource consents is the application to what are essentially dry river beds, as discussed earlier. The rivers of particular concern are the lower Ohau River, the Pukaki River and parts of the upper Tekapo River (under Genesis management and control). 28 The definition of what should be swimmable has not been well thought through and has been applied to all 4th order rivers. The lower Ohau, Pukaki and Tekapo rivers in the Waitaki Catchment are classified as fourth order and must meet the swimmable standard. I see two issues with this, the first is how the attributes for swimmability, such as E.co!i, can be measured when there is no river and secondly they are not swimmable if there is no water in the river for most of the time. I also note that the tables for E.co!i on the Ministry for the Environment website are different to those in Clean Water (2017) which do not include medians and 95th percentiles plus other inconsistencies. Whichever table is used the attribute will not be able to be achieved unless flows are continuously discharged into the diverted river beds. 29 The explanatory material is somewhat confusing in the information and background presented in the Clean Water (2017) document. In Section 1, p10 it is proposed the target should be applied to "rivers that are deep enough to swim in.. ". Yet the maps clearly show swimmability will apply to the Pukaki River and lower Ohau River which are not deep enough to swim in. On this basis they should be excluded from the application of the NPS-FM requirement. 30 If flows were added to these diverted rivers for the purposes of trying to achieve a swimming standard then my opinion is that they would still breach requirements for periphyton and MCI for the same reasons as the rivers that already have flows and breach those requirements. CONCLUSIONS AND RECOMMENDATIONS 31 In general I support discussion and implementation of a national approach and consistent national standards that will help maintain and improve environmental values and lake and river health. The

20 addition of more detail on monitoring and how the attributes should be applied is an important improvement on the earlier versions. 32 Meridian operates in systems which generally still have high water quality and unusual natural features such as glacial flour, largely lake fed rivers, some diverted rivers and issues with nuisance didymo. These unique attributes of the systems mean that applying attributes such as periphyton and swimability and an MCI trigger is not realistic or achievable. 33 Complying with Policy CBl cannot be achieved for diverted rivers and thus where they are in consented managed catchments they should be exempt. 34 Inconsistencies between the Clean Water (2017) document and the web version need to be addressed. 35 In my opinion: The Waitaki and Waiau Rivers are unique cases for periphyton where high biomass at times below the bottom line is now unavoidable: An MCI score of 80 is unlikely to be achievable in rivers infested with didymo (upper Ohau, lower Waiau and parts of the lower Waitaki) and cannot be achieved in diverted rivers (Tekapo, Pukaki and lower Ohau) without significant flows being continuously discharged and is unlikely to achieve the trigger level in any event. Diverted rivers of the upper Waitaki catchment which are the result of exercising consents for hydroelectric generation (Tekapo, Pukaki and lower Ohau) cannot achieve the swimmable attributes as they cannot be sampled, assessed against standards and are not deep enough to be swimmable. I anticipate that the above matters will have to be dealt with appropriately from a resource management perspective