Notice of Motion:
Investigation of Alternative Dam Proposal
Core assumptions of alternative proposal
• Cheaper ‘dam-only’ proposition – do away with
distribution network (or minimise the network)
• Can use dam on Makaroro at similar scale
• Water price can be reduced through alternative
• Dam-only has improved environmental outcomes
• Only public sector funding to be used
Alignment with Council-approved proposal
• Water Storage is critical for Hawke’s Bay
• Makaroro Dam site is only feasible dam site
• Some river corridors offer a means of water
distribution – the Tukituki main stem is primary
target with approx 5,000 ha irrigable below the
confluence
• Water storage needs public sector to finance it (in
part)
Removal/minimisation of distribution
network
• Waipawa River loses 3.0 -4.7 cumecs of surface water
to ground water in the reach Mangaonuku and SH50
• At 3 cumecs that's about 95 million m3 per year – about
the same as the static storage of the dam
• Groundwater goes to bottom end of basin
• A head race is required from Waipawa to Tukituki Rivers
to avoid the Waipawa losing reach and allow water
supply to Zones B,C ,D and M and lower Tukituki.
• The head race makes up approx. one-third the cost of
the distribution network (c. $42 million)
Removal/minimisation of distribution
network
• Without the head race neither the Council-approved
nor alternative proposals would be able to supply water
to 70% of the customer base
• If the water was moved via natural waterways only it
could service about 10,000 ha of land
• The RWSS canal headrace has capacity of 8.8m3/s to
service 17,200 ha which requires 58m m3 of water and
has a cost of $42m. This equates to 0.72c/m3
• Alternative proposal for 10,000 ha requires capacity of
5m3/s using 40m m3 and has an estimated cost of
$36m. This equates to 0.90c/m3
Smaller dam
• The current dam has a 90m m3 storage volume to service
25,000 ha, which has a value of $120M = $1.34/m3 of
water
• A dam to service 10,000 ha (alternative proposal) requires
40m m3 and has a value of $99M = $2.50/m3 of water
The price of water
Alternative Proposal
Alternative Proposal
without Opex
Capex
$135M (99-dam, 36 –
distribution)
$135M
All other capex (land
purchase etc)
As HBRC approved
proposal
As HBRC approved
proposal
Electricity revenue
$6M
$6M
Saleable volume
36M m3
36M m3
Financing
HBRIC (80M) plus
institutional investors
HBRIC (80M) plus
institutional investors
Opex cost
Pro rata reduction in
opex costs but retain all
Centralines costs
Pro rata reduction minus
Centralines and SPV
Cost per m3 of water
$1.18
0.77c
Environmental outcomes
• Alternative proposal assumes groundwater can be
pumped with no effects
• However the effects would significantly compromise all
spring fed streams in Zones B,C and D
• These streams provide key spawning native fish habitats
• The dam size would have to accommodate flushing flows –
adding approx 4M m3 to the size.
• On-farm storage of 90M m3 would need 3,600 ha of land
Avoiding “expensive cost of private
money”
• The alternative proposal proposes that private sector
capital be removed and the dam be publically funded via
HBRIC Ltd and the Crown. This would remove the need for
high commercial returns
•
One of CIIL’s principles is that it will invest only once
private sector capital has been exhausted. They will not
enter into a financial structure not involving the private
sector.
•
HBRIC (HBRC) cannot reasonably fund the difference
Other key considerations
• Commercial and structural issues with any major
departure from RWSS as proposed:
• Plan Change 6 will need to be substantially re-written
for groundwater abstraction
• Alternative proposal will need to be consented
• No unified control of nutrients
• Construction contract will need to be significantly
renegotiated and economies of scale could be
compromised for a smaller project
• Crown would need to completely re-organise their
investment criteria to suit an amended RWSS
Conclusion
• All the issues raised by the alternative proposal have, in
one way or another, been put forward, examined and
discarded, through pre-feasibility and feasibility stages
• The HBRC-adopted proposal brings together the
optimum package for cost, water uptake and price
• The alternative proposal:
• Is not hydrologically feasible
• Will increase the unit cost of water
• Will necessitate additional plan changes and
resource consent processes
• Could jeopardise extensive arrangements already
negotiated.