Meridian is sticking to the letter of resource management law. It risks big power generation decisions being made, at big environmental cost, without full cost-benefit analysis

Environmentally-friendly renewable power generation is environmentally ugly, too.

Big power generation decisions are being made right now, that would have large environmental costs, without proper analysis of costs and benefits, and without decision-makers being given the full picture, even when they have asked for it. To some extent, the Resource Management Act supports this. Meridian is — quite legally and, arguably, therefore properly — taking full advantage of it.

Take Project Hayes, for example: Meridian’s proposed 176-turbine wind farm on the Lammermoor range in Central Otago, opposed by Anton Oliver, Grahame Sydney, Brian Turner, et al.

Resource consents were appealed to the Environment Court, which cancelled them. A couple of weeks ago, Meridian’s appeal to the High Court was allowed, and the case sent back to the Environment Court for reconsideration. It had erred in law.

The Court had wanted a “comprehensive and explicit cost benefit analysis” of the proposal, looking at all the alternative options, to help it decide whether this wind farm would be an “efficient use and development of natural and physical resources”, in terms of section 7(b) of the Act. It said that specific costs and benefits should be “examined and if possible quantified”, especially where a matter of national importance is raised under section 6(b): “the protection of outstanding features and landscapes”.

It complained there were “large gaps” in the cost benefit analysis. It was extraordinary, it said, that in a $2 billion project more effort had not been made by Meridian and other government departments “to value more of the costs and benefits much more thoroughly”. Given the scale of the project, the Court would have expected proportionate evidence “on what were clearly always going to be key issues — the potential adverse effects on heritage and, especially, landscape values”.

Earlier, I posted about the Mokihinui hydro project, also a Meridian project. The first post was about whether this is a good option for hydro development on the West Coast, weighed against (non-Meridian) alternatives. The second was about Meridian’s interactions with decision-maker the Department of Conservation. Meridian seems to have been simultaneously bullish and balky, from time to time, as suits itself.

Briefing material released to me under the Official Information Act shows that for the Mokihinui, too, there have been complaints by decision-makers about a lack of proper cost-benefit analysis:

It should be noted that the applicants were asked to carry out a cost benefit analysis of the economic benefits of the proposal but the applicant refused stating that a cost benefit analysis was not a requirement under the RMA [Resource Management Act]. A consultant economist, for the Buller District and West Coast Regional Council assessed the application and observed that the information supplied by the applicant did not provide adequate information to make an informed assessment of whether the scheme is efficient and, therefore, potentially welfare-enhancing. Because the matters raised in support of the MHP [Mokihinui hydro proposal] have not been properly quantified, it is impossible to assess the potential importance of the positive effects claimed in support of the MHP … While the majority commissioners found in favour of the proposal primarily because of the economic benefits the scheme could bring to the region this is yet to be formally assessed by the applicant in the form of a cost benefit analysis. Considering the weight the final decision has placed on these matters this is a major omission.

Returning to Project Hayes, the Environment Court wanted to consider alternative locations. The Court was not alone in this; similar questions had been asked by the Central Otago District Council. The Council noted that alternatives were only briefly discussed in the application, and asked Meridian to address alternative methods for renewable energy generation, and alternative locations for wind farms. Meridian refused:

The RMA envisages that an applicant may seek consent for any particular proposal. That proposal must then be considered by a consent authority. A comparative assessment of hypothetical alternatives that are not being pursued by the applicant is of no assistance, nor are the details of such “alternatives” known to the consent applicant or Council. … In addition, Meridian considers it is incorrect to describe other locations as “alternatives” to the present proposal. … Where another site has attributes that also make it suitable for consenting it cannot be described as “an alternative” site — it is in fact “another” potential site.

Instead, it gave the Council a general report on its site evaluation processes, leading Meridian to the view that Project Hayes was a good site: the best site Meridian was aware of in the South Island for wind energy generation. This did not address what the decision-maker wanted, to the extent that the request was deemed to have been declined.

Meridian won its appeal, and on appeal, these were key issues. As the Environment Court itself had noted: “Not only should the benefits of a project be greater than the costs, but the least cost way of producing those benefits should be implemented. However, there is a real issue as to whether that is required by the RMA.”

According to the High Court, the approach adopted by the Environment Court had been novel. It was “also aware that divisions of the Environment Court chaired by Judge Jackson have been pursuing the underlying [cost benefit] theme for some time, but with less specificity. It is not necessarily an error of law to adopt a novel approach”. However, it went on to find that there had been some errors of law.

Cost benefit analysis was not ruled out. On the contrary, in the directions given by the High Court, it was explicitly permitted. The problem had been too much emphasis on quantitative evidence, when there was extensive qualitative evidence from various experts on the potential adverse effects of the wind farm that the Environment Court could have used.

Nor was considering alternative locations improper; on the contrary, this was a relevant consideration and reasonably necessary, in terms of the Act. But there were limits on how far this could be pursued. The Court was permitted to ask for a description only, and needed to make sure it was using that information under the right section of the Act.

It’s wholly unclear to me whether these corrections will, eventually, change the decision on the facts. It may be no more than a matter of emphasis.

I’m wearing my policy-maker’s hat, today. Meridian, by contrast, is taking the lawyers’ road, and as their appeal result shows, getting it right.

But renewable energy generation is a matter of public policy and public interest. It’s about how we will use scarce resources: an outstanding landscape, a wild river.

When public assets are in issue, whether the RMA requires it or not, there is an argument Meridian is not following good decision-making practice. A legalistic approach is serving them fine. My question is whether it’s serving us, as the owners of that company — whether a socially and environmentally responsible company would behave in this way. As profiteering business men, they’re golden. As policy-makers, though, they’d be sacked.