Contact Energy awaits Environment Court decision in spill case

Eleven alarms sounded over six days – but were ignored, resulting in a massive sediment discharge into a stream, and from there, the Waikato River.

Waikato Regional Council says it was an aggravating feature of the spill north of Taupō, which contained geothermal fluid, pumice, soil and ash and was estimated at 15,000 cubic metres.

Contact Energy Limited was charged under the Resource Management Act with unlawfully discharging a contaminant on to land in circumstances that may have resulted in the contaminant entering water. It pleaded guilty at the first opportunity and has so far spent more than $1.4 million on its emergency response and civil works, as well as losing $2.2m in production.

The charge has a maximum penalty of up to $600,000 and Principal Environment Court Judge David Kirkpatrick presided over a sentencing hearing at the Taupō District Court on Friday to hear submissions on what Contact’s sentence should be. He has reserved his decision.

Contact is New Zealand’s second-largest electricity generator and operates four geothermal power stations on the greater Wairakei geothermal field near Taupō.

The volume of the spill, which occurred on February 19, 2019, was enough to overflow the Waipuwerawera Stream and turn the upper Waikato River and Huka Falls brown. The sediment from the discharge primarily settled in Lake Ohakuri, with minimal flow further down the river.

Taupō District Council had to shut off one of its municipal water intakes and Ngāti Tūwharetoa, the iwi with legal ownership and mana whenua over that portion of the river, says the spill has caused great physical and cultural damage and impacted its ability as kaitiaki to safeguard the spiritual wellbeing of its taonga.

Contact apologised to the Tūwharetoa Māori Trust Board and Nga Kaiahutu o te Awa o Waikato for the spill and the damage caused and has since been working through a restorative justice process with Tūwharetoa.

The agreed summary of facts says that on or about February 19 last year Contact was responsible for the unlawful discharge of geothermal fluid and sediment to the Waipuwerawera Stream and Waikato River at Taupō.

An over-pressure event at a reinjection wellhead just north of Taupō meant around 44,000 tonnes of geothermal fluid that was supposed to be reinjected into the wellhead was instead diverted to a soakage pond for six days. The pond was not constructed to receive that volume of fluid and ultimately collapsed, resulting in the fluid and a portion of the pond wall, made of earth, to collapse on to nearby farmland.

The soils, estimated at 15,000cu m and full of fluid, slid across the farmland for around 50m before cascading over a gully and into the Waipuwerawera Stream, taking some of the gully wall with it. From there, it washed downstream to the Waikato River.

The summary of facts says the original design at the wellhead provided for a fully automated over-pressure protection system that would automatically switch off the pumps if fluid was diverting to the soakage pond. But during one of the design phases, changes were made that removed the automated feature. Instead, the system relied on operators at the Wairakei control room understanding alarms and manually stopping the pumps.

But the control room operators did not recognise the significance of the alarms being activated, even though 11 alarms were received at the control room between February 13 and February 16, 2019. The alarms had activated during previous pump restart procedures and they considered that what they were seeing was a normal occurrence, although the continuing alarms should have alerted them to problems.

“As it transpired, the operators did not have that necessary understanding and therefore did not stop the pumps when they should have.”

Since the system was installed in 2012 there had been no hazard or risk-auditing by Contact that may have identified that the pipeline over-pressure protection system was not fit for purpose, and the first such procedure was scheduled for 2020.

Counsel for Waikato Regional Council, Anna McConachy, said while Contact had pleaded guilty at the earliest opportunity, had a successful restorative justice programme with Tūwharetoa, had signalled genuine remorse and been fully co-operative, an aggravating feature was that there were no clear procedures in place for control room operators to follow when the alarms were activated, as their training in regard to that particular wellhead was limited.

“There was no external cause. This wasn’t something caused by a large rainfall event or some other external factor,” she told the court. “This case was internal to Contact’s operations as a result of the lack of fail-safes being in place.”

She argued that because of Contact’s large size and financial capacity and because the breach was large it should receive a substantial fine as a deterrent and denouncement, and submitted that the penalty should sit at around $250,000.

Contact’s counsel Patrick Mulligan submitted that the company’s culpability was at the moderate level of around $125,000 to $150,000 considering the restorative justice process it was undertaking.

He said that because the factors leading to the over-pressure event had not occurred before, it was not a known risk and the manual alarms were considered appropriate, or at least would have been appropriate had they been responded to properly.

But Judge Kirkpatrick said he was still wondering why the people in the control room, who were aware that the alarms had gone off, had not checked the system to see why.

“At what point when the alarm goes off do you check over the system and say ‘why has this alarm gone off?’ The system is saying ‘do something’ and nothing was done and that is the core of it.”

He said he had to take the restorative justice process into account and the fact that Tūwharetoa had spoken positively about it was to Contact’s credit.

Tūwharetoa Maori Trust Board has said that its preference is that any outcome of the court process be directed towards the Waikato River and Waipuwerawera Stream.

Board representative Ruby Pitiroi told the court it was regrettable that Tūwharetoa had only found out about the spill via Facebook and the restoration work was also frustratingly slow. However, she said the trust board also acknowledged that Contact met with Tūwharetoa for a site visit, were open about what had happened and apologised for it and had approached the restorative process in an open and genuine manner.

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