Poihipi Power Station

Litigation started in 1989 between the Electricity Corporation of New Zealand and Geotherm Energy Limited (owned by the Waituruturu Trust), challenging ECNZ's entitlement to draw geothermal fluid from the Wairakei field and in 1990 GEL applied to take 44,000 tonnes/day for their new power station, to be named Poihipi, but was granted only 10,000 tonnes/day. ECNZ objected because of their need for the Wairakei power station. A report describing this need was not made available to GEL, despite applications and in frustration, GEL applied to declare the ECNZ "anti-competitive" and using their dominant market position to deter advisors, service providers, customers, financiers and investors from dealing with GEL, as well as making baseless statutory applications to hinder GEL's planning applications, and that the ECNZ intended to prevent GEL from supplying power to Electrical Supply Authorities.

By 1996 the power station was built. MGL attempted to apply for additional consents allowing the discharge of contaminants to the air, but the Ngati Rauhoto hapu appealed due to inadequate consultation. An application to commence usage was rejected because it was MGL's error in deciding to complete the station before securing all necessary consents, but a priority hearing was allowed. Ngati Rauhoto sought to relitigate the power station consent, but were estopped as having already accepted the use of geothermal fluid. Costs of $700,000 were awarded against Ngati Rauhoto.

Immediately after consents were granted, it became clear that the deep liquid steam wells did not provide sufficient fluid. As well, changes to the electricity pricing scheme made it less profitable for Mercury Network to buy power from the station. MGL wrote the value of the plant down to $50,000,000 and could not cover the debenture of $80,000,000, thus the call for the appointing of receivers for MGL and PLL, but the McLauchlans obtained an interim injunction against this. Meanwhile, the Electricity Corporation had been dissolved and the Wairakei power plant was now owned by Contact Energy Limited, who had applied for consent to reinject used fluid as part of their new low-temperature plant to be added to the main Wairaki stations, thus reducing their dumping into the Waikato river. MGL objected because this reinjection of low-temperature fluid (much cooler than that already being re-injected) would be detrimental to their Poihipi plant. But in December 1998 Judge Whiting held that Contact's existing (inherited) consents allowed for reinjection at any temperature and consequently, receivers were appointed for MGL and PLL, who decided to sell the Poihipi power plant and the leased land to Contact.

The McLachlans responded with litigation on two fronts: suing Mercury Energy (by then split, into retail activity still called Mercury Energy but taken over by Mighty River Power, while the line network business became Vector) for faults that led to the failure of the joint venture (claiming $400,000,000), and, denying that the land had been properly sold to Contact as the McLaughlans (the pre-MGL owners) had arranged for the right of first refusal should that land be sold. Multiple entanglements, reaching to the Privy Council ensued.

In a deed of settlement in 2006, the McLauchlans abandoned damages proceedings and further arguments over the lease. This however triggered more reverberations in the workings (or not) of the lease but the High Court held that arguments based on an implied term, rectification, mistake, estoppel, and relief against forfeiture were rejected, and that the lease was void for having an uncertain term of application.

Thus, the "right of first refusal" did not in fact protect the McLauchlans, and, Contact retains a competitive advantage. Details in Climate Change Law, Simon Schofield, 2014.

The web page https://web.archive.org/web/20141225112813/http://www.contactenergy.co.nz/aboutus/shared/powerstations merely states "The Poihipi Road power station was commissioned in 1997 and was bought by Contact in 2000."

In 2004, the McLachlans secured resource consent for a second Poihipi power station just over a kilometre SSE and again encountered objection from Contact.