Meridian vs Transpower: The battle over Lake Pukaki’s ‘contingent’ water and power prices
Wednesday, 18 February 2026
A fast-track panel will decide by early July whether Meridian should receive permission to take extra water capable of generating about $80 million worth of electricity from Lake Pukaki free of charge, over the next three years.
The power giant has argued having the right to lower Lake Pukaki five metres below its current normal operating minimum would allow it to generate more hydro power and lower the price of electricity while longer-term arrangements to shore up the energy market were put in place.
But fellow gentailer Genesis has voiced concern over a possible knock-on effect on one of its power stations on the interconnected Lake Tekapo scheme, while electricity system operator Transpower has argued it is important to save some so-called “contingent” water for use only with its approval as a last resort.
In some scenarios, relaxing access to contingent hydro storage could result in significantly higher power prices, potentially costing the country hundreds of millions of dollars, because it could mean water would not be available when it was most needed, Transpower warned in a research paper published in December.
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A fast-track panel chaired by Auckland lawyer Kitt Littlejohn was appointed last week to rule on Meridian’s application and a Transpower spokesperson said it expected to be consulted.
Correspondence released to The Post under the Official Information Act shows Meridian chief executive Mike Roan wrote to Transpower chief executive James Kilty, criticising Transpower’s objections, soon after it published its report in December.
Roan voiced disappointment the electricity system operator had issued the report without “forewarning” Meridian, and noted Kilty’s decision to agree to give an interview to RNZ on the topic.
“I was disappointed that Transpower chose to publish its report without forewarning, outside of existing decision-making processes, and seemingly without a formal opportunity for feedback,” he told Kilty.
“This is a highly unusual step … made more so by your decision to also give a radio interview.”
Meridian said, when asked for comment on the letter, that it did not suggest any need for Transpower to notify it about media appearances or interviews.
The risk Transpower described in its modelling was unlikely and “a less than one in 93-year scenario”, Roan said in the letter to Kilty, suggesting they meet “to find a way for our organisations to share any more detailed views constructively”.
“The Transpower analysis is like saying we should refuse to fly because plane crashes are catastrophic. They undoubtedly are. But as we all know, the benefits of flying are greater than the risk it represents,” he said.
In a later email in January, Roan told Kilty he saw allowing Meridian to access the contingent water resource at Lake Pukaki as the “only immediate ‘cost of living’ decision” the industry could make to help consumers.
Meridian said in its fast-track application that the current arrangements under which Transpower can authorise the use of contingent storage had been shown to be “unworkable” and did not give generators and customers confidence that the contingent storage would be available when it was needed.
“Meridian will continue to advocate for measures that we believe are in the best long-term interests of consumers and of the country,” Roan told The Post.
The company said that even if it was granted the rights it was seeking, contingent storage would be accessed rarely, only when the country really needed it, and most likely only a fraction of the available amount.
The relationship between institutions in the electricity sector and Meridian came under the spotlight earlier this month when the Electricity Authority watchdog acknowledged four staff had breached its guidelines by letting Meridian pay for their dinner while they were on a two-day tour of Meridian’s South Island hydro assets organised by the power firm.
Energy Minister Simon Watts said the EA had recognised the breach was unacceptable, and that he did not believe it was indicative of a wider cultural issue that the EA might need to address about how it saw its role as a regulator.
“We’ve got a new deputy chairperson who’s moved in there. We’ve bolstered that board and been very clear on expectations in regards to that entity. From the advice that I’ve received, this is a one-off. They’ve dealt with it and accountability has been taken by the agency,” Watts said.