Category: Radio New Zealand

Source: Radio New Zealand

Meridian Energy is seeking new leeway over the country’s largest hydro lake, in a proposal that has locals and experts conflicted.

The gentailer wants permission to draw Lake Pūkaki down to lower levels than usual – from 518 metres above sea level to 513 – for up to three winters in a row, without needing special approval from Transpower.

It secured referral to the fast-track process in August and said it would carry out a full socio-economic impact assessment as part of its full application.

It was also seeking to reinforce the Pūkaki Dam with rock armouring to handle lower water levels.

Meridian said it would ‘rarely’ need to access contingent storage, “and most likely only a fraction into the available amount”.

However, modelling in the fast track referral documents showed the move could release enough energy to power 75,000 homes and reduce wholesale electricity prices by about seven percent, by removing uncertainty over when Meridian could tap into its backup water storage, letting it plan generation more efficiently.

The company’s general manager of development, Guy Waipara, said the change would reduce the impacts of future droughts by ensuring a steady supply of electricity for New Zealanders.

“Over the last couple of months, we’ve seen how healthy levels in the hydro storage lakes contribute to lower wholesale prices. We’ve calculated that freeing up access to contingent storage is likely to save wholesale purchasers of electricity approximately $500 million a year by reducing the need for the system to rely on expensive thermal fuels,” he said.

For Mt Cook Lakeside Retreat co-owner Kaye Paardekooper, fluctuations in the lake level were nothing new.

However, she wanted to know what the proposed changes would mean for tourism and aquifers, and said Meridian needed to be frank with residents.

“We’re in two camps. We realise how important the power is for New Zealand, and we’re very much into sustainability so we recognise that hydro, it’s actually a very clean energy that’s being generated,” she said.

“I would love to see a visual – to see ‘this is what it looks like now, this is what it’s going to look like’. It’d be good to have more information, even if it’s fast-tracked. As a responsible neighbour – we see Meridian as our neighbours – it’d be nice for them to talk to us.”

Experts caution lake could shrink by a fifth

Earl Bardsley, a hydrologist and associate professor at the University of Waikato, said the option to dip into the lake would give Meridian a buffer during dry years – especially with the country running out of gas “fairly unexpectedly”.

However, he estimated that if Meridian dropped the lake to the minimum 513 metres, it would cause a 20 percent reduction in the lake’s size compared with the existing permitted drawdown, and could expose an additional 35 square kilometres of lakebed.

He said he would not want to see the measure become long-term.

“There’ll be a big visual impact, and that’s not desirable by any means, but we’re getting to somewhat desperate times,” he said.

Earlier this year, the government declined Contact Energy’s fast-track referral application to lower Lake Hāwea’s operating range.

Bardsley said Meridian’s application was different because Lake Pūkaki was in a relatively unpopulated area.

“Pūkaki is the major hydro storage lake in New Zealand, so it’s really geared towards hydro storage. If you had to choose one lake to get something done quickly, you would probably choose Pūkaki. You wouldn’t choose Hāwea, because there are all kinds of implications with the community.”

Environmental questions

Meridian’s experts believed the environmental effects could be kept minor – but in fast-track referral documents, government agencies and councils suggested more information was needed about the impacts on native lizards, black stilts and lakeshore plants.

Commenting on Meridian’s referral application, Transpower said there was merit in the company having greater flexibility to access some of the contingent storage.

However, the national grid operator described it as a “complex” issue.

Transpower executive general manager of operations Chantelle Bramley told RNZ that if contingent hydro storage was used faster or earlier than necessary and it did not rain, New Zealand could run out of energy very quickly.

Contingent storage played a critical role as the country’s fuel of last resort, she said, especially during extended dry periods such as last year’s.

For Meridian’s Guy Waipara, though, last year’s dry period was a key example of why the company needed easier access to contingent storage.

“Meridian is already authorised to utilise Lake Pūkaki from 518m down to 513m, but currently this is controlled by Transpower. During the energy shortage of Winter 2024 we found that by the time approval came through we no longer needed to access that water,” he said.

‘Band-Aid’ fix

Environmental Defence Society chair Gary Taylor argued Meridian’s move to dip into contingent storage was underpinned by wider structural problems.

“The electricity market is not delivering a package of renewables that’s workable quickly enough. And so we’re having to do these Band-Aid fixes as we go along. I think the problem with the market is it was designed in a different era – climate change and pushing hard on renewables wasn’t part of the objective and it’s now out of date. It needs a fundamental reset so that we can build renewables faster,” he said.

He said the fast-track process was too superficial and did not give serious thought to the implications of dropping the lake by up to five metres.

Meridian should offset any loss of biodiversity or landscape with “robust” compensation, he said.

“Meridian has got plenty of resource to do that. What it’s proposing to do is to take what is essentially free water, to increase its profits. It needs to come up with a properly sized compensation package – and that might involve putting more effort into ridding the Mackenzie Basin of wilding pines, for instance, which are ecologically damaging. There are a number of things that they could do.”

Company says lower lake levels ‘highly unlikely’

In a statement, Waipara said Meridian had applied for a three-year timeframe while new electricity generation and battery storage were built “and more robust long-term security settings are developed”.

“The sudden decline of gas as a firming fuel has put additional pressure on New Zealand’s electricity industry, and like others we have had to increase the size of our investment over the coming years and think more broadly about how we produce electricity. We’ve invested more than $1 billion in the past five years, and we have a further $2 billion of investment planned over the next three years,” he said.

Asked about the potential environmental implications, he reiterated that contingent storage would only be accessed “when the country really needs it and most likely only a fraction of the available amount”.

“We care deeply about the wellbeing of native wildlife in the Waitaki Basin. Meridian is working closely with DOC and other partners in the Waitaki Valley through Project River Recovery, which preserves flora and fauna in braided river habitats in the Upper Waitaki Basin.”

Waipara said the application was about “easier access, not access to new depths”.

He said none of the company’s modelling showed lake levels reaching the minimum level of 513 metres above sea level.

“While access to contingent storage may result in the lake being taken below 518 metres, it’s more likely that over the three years of access, that storage will not be used.”

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand

Source: Radio New Zealand

US President Donald Trump has raised the idea of a 50-year mortgage term to help first-home buyers – but would it work for New Zealanders trying to buy houses, too?

Media reported that Trump wants the US Government to back a 50-year mortgage option that would help address concerns about housing affordability.

Federal Housing Finance Agency director Bill Pulte reportedly said it was “a complete game changer” for home-buyers.

But is it actually a solution?

Ed McKnight, economist at property investment firm Opes Partners, said it could be an expensive one over the long term, although there would be some immediate repayment savings.

He calculated that for every $100,000 of home loan a borrower had, the payment on a loan at 5 percent interest rate would be $19 lower per week lower with a 50-year term than a 30-year one.

“A $600,000 mortgage would save $114 a week in repayments.”

He said home-buyers would also be able to borrow about 13 percent more. Investors might be able to borrow an extra 20 percent.

But the flipside of this would be that the loan overall would become a lot more expensive.

The longer a loan term, the more interest you have to pay overall.

McKnight calculated that it could mean paying $172,000 in interest on every $100,000 of home loan borrowed, compared to $93,000 on a 30-year home loan.

“One of the things I’ve thought for a while is if home ownership is becoming more expensive, because house prices keep going up, what are the different levers that banks or the government could pull in order to make it slightly more affordable? Paying the loan off over a longer period might be one of those levers.”

But he said it was substantially more expensive. “I’m going to take over 60 percent longer to pay off my mortgage but I can only borrow an extra 20 percent if you’re an investor or less than that if you’re an owner-occupier.”

He said it would help people who were on the cusp of mortgage affordability.

But it could also contribute to rising house prices. “If you allow people to borrow 10 percent more money or 20 percent more money it doesn’t necessarily mean that all goes straight into higher house prices and they are 10 percent tot 20 percent higher than they would otherwise be.

“But it is absolutely certain that it would lead to some amount of house price inflation and some of that money would flow through into higher house prices because you’ve got more money in the system but the same number of houses. You might get a few more houses being built because you’ve got some extra demand but initially you would except to see a house price bump.”

While New Zealand borrowers usually take out home loans over a 30-year term, many people pay them off more quickly.

A survey of the banks by RNZ showed significant numbers had paid off more than they needed to – in some cases up to 65 percent of customers.

David Cunningham, chief executive at mortgage broking firm Squirrel, said he thought most people took 25 to 30 years to get from buying their first home to making their final mortgage payment, probably on a different house.

“The average age for a first-home buyer is around 36 and it’s those last few years pre-retirement where the big reductions in the mortgage happen.”

He said people would usually increase their mortgage payment as their income rose over time.

“Pretty consistently most but not all homeowners hit retirement with minimal or no mortgage.”

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Source: Radio New Zealand

An economist says US president Donald Trump’s flip-flopping on tariffs has New Zealand businesses on edge.

Trump has cancelled tariffs on several US food imports including beef and kiwifruit.

Sense Partners economist John Ballingall said it was good news for a lot of businesses – but many were still finding it hard to relax.

“The [frequent] changes are making life very difficult for our businesses. When businesses are uncertain they tend not to invest or hire people, and the constant flip-flopping is certainly affecting businesses’ planning,” he said.

“When the global economic environment is uncertain it can be a bit risky making big investment decisions or hiring a whole bunch of people because you don’t know how the market’s going to change.”

“Right now the US economy is very hard to predict and that makes long term planning very difficult … They’re both nervous and fully expect Trump to change his mind again.”

Trump’s latest reversal could be a sign of things to come, Ballingall said.

“I think what we will see over the next few months is that US consumers, and therefore voters, are starting to get very frustrated with the high cost of living and that’s what has driven the cancellation of these tariffs,” he said.

“If inflation continues to increase in the US, which most people expect it will do, then it’s entirely possible that we could see more tariffs come off.”

The approaching midterms could ramp up that pressure further, he said.

“The fact that US voters are starting to become much more concerned about cost of living issues will be troubling the administration, because the midterm elections are now not that far away and they probably don’t want to be going into those elections fighting a cost of living crisis,” Ballingall said.

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