TRANSCRIPT OF PROCEEDINGS East West Link Proposal · PDF filecross-examination, thank you. MR MULLIGAN: Thank you, ... co-location you wouldn’t make assumptions ... You agree or

TRANSCRIPT OF PROCEEDINGS

East West Link Proposal

HEARING at

HUNTERVILLE ROOM, ASCOT STAND,

ELLERSLIE EVENT CENTRE,

80 ASCOT AVENUE,

REMUERA,

AUCKLAND

on 8 September 2017

BOARD OF INQUIRY:

Dr John Priestley (Chair) CNZM QC

Mr Alan Bickers (Deputy Chair) MNZM JP

Mr Michael Parsonson (Board Member)

Ms Sheena Tepania (Board Member)

Hearing Proceedings

Day 45 Friday 8 September 2017

Time Name Representing Topic Documents Submitted /

Presented

Transcript Ref.

Page no's

9.07 am Mr Grala Mercury NZ Examination-in-chief by Ms

Devine

Hearing summary 6077

9.10 am A short adjournment 6078

9.20 am Mr Mulligan NZ Transport

Agency

Cross-examination Exhibit 29 – Auckland Unitary

Plan – supplementary statement

for Mighty River Power,

Stephen Colson

Exhibit 30 – Southdown land

use Consent, Feb 2012

Exhibit 31 – Southdown Power

Station Map, Existing +

Proposed planting 5.4.12

Exhibit 32 – Outstanding

Requirement notice 18.5.15

6078

9.32 am Board Board of Inquiry Questions 6082


Agency

Cross-examination 6089



Agency




Agency


10.43 am Morning tea 6105


Agency




Agency


12.01 pm Board Board of Inquiry Questions 6126

12.04 pm Mr Mulligan NZ Transport

Agency


12.10 pm Board Board of Inquiry Questions 6130

12.23 pm Mr Mulligan NZ Transport

Agency


12.27 pm Ms Devine Mercury NZ Re-examination 6136

12.45 pm Dr Priestley Board of Inquiry Housekeeping 6142

12.46 pm Adjourn 6142

Page 6077

Ellerslie Event Centre, Auckland 08.09.17

[9.07 am]

DR PRIESTLEY: Yes, thank you. All ready to proceed with Mr Grala and there's nothing

preliminary we need to discuss, I don't think, is there, Ms Devine? 5

MS DEVINE: No, sir.

DR PRIESTLEY: Right, swear Mr Grala in please.

10

Mr Grala (sworn)

MS DEVINE: Could you please give your full name?

MR GRALA: My name is Nicholas Colyn Grala. 15

MS DEVINE: What is your job and where do you work?

MR GRALA: I am the Planning Manager at Harrison Grierson.

20

MS DEVINE: Can you confirm that you've prepared a statement of evidence dated 10

May 2017?

MR GRALA: I did.

25

MS DEVINE: And can you confirm that subject to any corrections in your summary

statement dated 6 September that it is true and correct?

MR GRALA: To the best of my knowledge, yes.

30

MS DEVINE: Thank you, Mr Grala. For the Board's benefit, we had, as requested,

provided Mr Grala's summary statement in advance earlier this week

with a view to trying to reduce the amount of time that the Board needs

to sit this week. I'm not sure, sir, the view was it could be taken as read.

35

MR BICKERS: I've read it.

MR PARSONSON: I've read it.

DR PRIESTLEY: Yes, all right. 40

MS DEVINE: Thank you, sir. Mr Grala, if could you just any questions that the Board

or my friend may have for you.

DR PRIESTLEY: I think possibly it might be sensible to start with your cross-45

examination first. Wait a minute, Mr Parsonson, would you like to ask

Page 6078


some questions first?

MR PARSONSON: Yes, I do have questions. I can lead off with them now or I can

appropriately interject as necessary, whatever suits the parties. I might

as well lead off now, if that's all right. There will be an overlap with 5

Mr Mulligan.

DR PRIESTLY: It's probably best. I was thinking, Mr Mulligan, we had a brief

discussion about this before we came in and it is probably best if some

Board questions are asked first so that your cross-examination isn't 10

unduly interrupted.

You have started off a horse race, Mr Grala.

MS DEVINE: All bets are in. 15

DR PRIESTLEY: It is our last day of evidence so I guess it's appropriate. Symbolic. I

think we better just take a quick break until they have sorted it out. It

is not fair for Mr Grala to compete with that.

20

ADJOURNED [9.10 am]

RESUMED [9.20 am]

DR PRIESTLEY: Thanks very much. So we will let Mr Mulligan go first. Mr Mulligan, 25

cross-examination, thank you.

MR MULLIGAN: Thank you, sir. Good morning, Mr Grala, how are you going?

MR GRALA: Good, thank you. Good morning. 30

MR MULLIGAN: I just wanted to start initially with some of the terminology that you've

used in your evidence. You've used the term "lifeline infrastructure"

in a number of places. Is it your view that the Southdown site is lifeline

infrastructure? 35

MR GRALA: Could you please refer just to whereabouts that is in my evidence?

DR PRIESTLEY: Sorry, have we got his mic on? What was your answer again?

40

MR MULLIGAN: He's telling me to find it in his evidence, sir. Now, I'm flicking through.

While my junior finds the reference, there was another reference that

you did use "high intensity land use" at your paragraph 204 of your

primary evidence in relation to the East West Link.

45

MR PARSONSON: Mr Mulligan, paragraph 11 might be a place to look. In the middle of

paragraph 11 it says, "I have included the term network or lifeline

Page 6079


utility operator."

MR MULLIGAN: There is one at paragraph 31 too.

MR GRALA: Okay, I have found that paragraph. Would you just be able to repeat 5

the questions, please, so I can answer it?

MR MULLIGAN: Yes, we will go back to lifeline infrastructure. Do you consider the

Southdown facility lifeline infrastructure?

10

MR GRALA: Yes. Yes, I do.

MR MULLIGAN: Are you aware that term comes from?

MR GRALA: From memory I think it's originally from the Civil Defence Emergency 15

Act. I think that defines lifeline utilities.

MR MULLIGAN: Are you aware that it defines the whole entity, say Mercury as a whole,

as a lifeline infrastructure as opposed to individual sites? Are you

aware of that distinction? 20

MR GRALA: It's not in the front of my mind, no. I would have to have a look at that

legislation to see what the wording was again.

MR MULLIGAN: If that were correct, would you accept that perhaps the Southdown site 25

on its own may not be appropriately described as a lifeline

infrastructure if it requires the whole network?

MR GRALA: Without seeing that wording I couldn't make that -- couldn't agree with

that, sorry. 30

[9.25 am]

MR MULLIGAN: Well, you've put the reference in without knowing the wording so if, as

I say, the definition involved the whole of Mercury infrastructure, that 35

were the case, would you accept that it's inappropriate to use lifeline

infrastructure in relation to this one piece of the network?

MR GRALA: As a principle, if that was the definition, then this would form part of

Mercury's network of infrastructure and if that was defined as lifeline 40

utility then I don't see why it wouldn't.

MR MULLIGAN: Now, again, going back to your paragraph 204 of your evidence.

You've referred to the East West Link as a high intensity land use and

Page 6080


I think you indicate that you got that statement from Mr Phillis?

MR GRALA: That's correct, that's what it says.

MR MULLIGAN: Is that the source of that reference? 5

MR GRALA: That's what it says, yes. That's where it's from.

MR MULLIGAN: Because in his evidence, and I think you were here when Mr Phillis

gave evidence? 10

MR GRALA: I was.

MR MULLIGAN: He indicated that he was applying that term in a way which didn't really

fit with its origins in terms of a specific facility containing specific 15

hazardous goods. So he was applying it by analogy. So you would

accept any limitations that he --

MR GRALA: Yes, if he made those concessions then, yes, that's where that comes

from. What I would say is that, as a planner, I would still view the 20

proposal as quite an intensive use based on the volume of traffic.

MR MULLIGAN: But ultimately not one that has a label or a classification attached to it

in the way that you might have suggested by using that term?

25

MR GRALA: Correct.

MR MULLIGAN: Similarly, you describe the Southdown site with East West Link

approximate to it as an operational hazardous facility. Now, when I

put the question to Mr Phillis he indicated that the term "hazardous 30

facility" is meaningless in terms of a definition. Would you accept

that?

MR GRALA: I think Mr Phillis was talking about hazardous -- if I recall last week,

he was talking about the storage of hazardous substances and so from 35

my memory what he was talking about is whilst there's hazardous

substances on the site, I think he was referring to a definition of the

plan and it might not meet that --

MR MULLIGAN: You mean a major hazardous facility. 40

MR GRALA: Yes, that's correct.

MR MULLIGAN: This isn't that, is it?

45

MR GRALA: I think the power station has many hazards but accept that if Mr Phillis

is of a view that it doesn't meet that definition on the plan then, yes, it

Page 6081


wouldn't be that.

MR MULLIGAN: In terms of the gas fired element, the consented element, it's not that

operational, is it?

5

MR GRALA: It's not operating at the moment, it's under a care and maintenance

regime. Again, it's got all the necessary consents so that it can operate

in the future and, in my view, it forms part of the existing environment.

MR MULLIGAN: Now, again, going back to this issue of terminology, at paragraph 3 of 10

your evidence you've helpfully given us some quotes from the Oxford

Dictionary about mothballing and decommissioning. Were you here

when Mr Whineray gave evidence?

MR GRALA: No, I wasn't. 15

[9.30 am]

MR MULLIGAN: I put to him then and it appears -- well, I haven't seen, except for one

notable late exception, any reference in Mercury's public statements to 20

mothballing. They've simply said it's closed, the station.

MR GRALA: I'd have to go back and check what they're saying but I think what I

was trying to describe here is that on the basis of the material that was

lodged with the application, in the absence of any assessment of 25

Southdown, as a planner on the outside looking in at how the

applications were formed, it was my view that one of the reasons for

that is that NZ Transport Agency may have mistaken the current state

of the power station. So rather than it being closed and never operating

again, which would be decommissioned, it's in a state of care and 30

maintenance, which is probably more akin to mothballing. But it's a

general term, I wouldn't expect him to use the same terminology

necessarily.

MR MULLIGAN: To what extent do you consider it's - because you refer to this and I will 35

come on to it - significant that in your assessment NZ Transport

Agency might have bene mistaken about the status of the plant?

MR GRALA: I think it's firstly a big mission. I think it has a flow on effect right from

the start of the project in terms of looking at the options and then 40

identifying corridors and then picking alignments, and then a flow on

from that into a detailed assessment of the environmental effects all the

way through the conditions. I think it undermines everything.

MR MULLIGAN: But surely we are here where we are now and we can address these 45

things now, rectify them now. Surely it fades a bit.

MR GRALA: You asked me a question about the background to the applications but,

Page 6082


yes, that's part of the hearing and there's evidence that can be put before

the Board that can address that, but it's all part of the process.

MR MULLIGAN: It may pay, Mr Grala, if you just slightly speak up. I can hear you.

5

MR GRALA: I don't want to yell.

MR MULLIGAN: No, they're a bit flighty.

DR PRIESTLEY: Mr Grala, it seems your summary, which has come in helpfully last 10

week, and what you're saying, the issue Mr Mulligan is putting to you,

although there's inevitably a degree of speculation being as objective

as you can, you are of the view, are you not, that NZ Transport Agency

to some extent misconstrued what Mercury has done with its power

plant and that had they not made that error of misconstruction the 15

alignment might have been put somewhere else. That's permeating

your evidence, isn't it?

MR GRALA: That's true. So as best I can, I guess, from someone on the outside

looking at it objectivity and putting myself in their shoes in terms of if 20

I was the planner putting the applications together, if I thought the

power station had been decommissioned and would never start again

versus a power station that was mothballed and under a care and

maintenance regime and could, under its consent, start at any point in

time, depending on the whim of Mercury, then I think I would go about 25

the whole process differently. So it's me just looking at if it was

reversed and I was putting it together how would I treat it and how that

misinterpretation might play out through the applications.

DR PRIESTLEY: Regardless of the subtle differences between mothballing and 30

decommissioning, the consents still remain, don't they?

MR GRALA: Correct.

DR PRIESTLEY: Which is important for a planning perspective? 35

MR GRALA: Well, it is planning 101, isn't it, sir? It's what you can rely on. The

point I was trying to make there is that it's a subtlety the difference

between mothballing and decommissioning. If you didn't give it any

great thought you could be easily misunderstood and go down a track 40

that you wouldn't otherwise go down.

DR PRIESTLEY: All right, thank you for clarifying that. That's what Mr Mulligan was

asking about.

45

MS TEPANIA: Mr Mulligan, can I interrupt, I apologise, because I'm confused about

Page 6083


the lifeline infrastructure definition as well.

[9.35 am]

Can I ask two questions to Mr Grala on that? Mr Grala, in your 5

evidence-in-chief, under your executive summary in terms of your

definitions about the Southdown site, you defined the Southdown site

as Mercury's Southdown site and then part of that site includes the

Southdown Power Station and then the Solar Research and

Development Centre. Later on in your evidence at paragraph 14 of 10

your evidence-in-chief you say -- you talk about Mercury's primary

submission and it's about NZ Transport Agency not having assessed

the lifeline infrastructure located at the Southdown site. Is there a

difference between infrastructure located at the Southdown site, the

Southdown site you define at Mercury's? Because arguably you could 15

interpret that two different ways, ie First Gas assets, Transpower assets

being infrastructure, lifeline infrastructure at the Mercury site, not

including Mercury as lifeline infrastructure. I don't know how to read

it and it confuses me again at paragraph 36 because at 36 of your

evidence-in-chief you're talking about Mercury and then you say, "That 20

lifeline infrastructure". So what do you define -- and I understand your

answers to Mr Mulligan that you are not clear on what the definition

was, but you have used it in your evidence-in-chief. What do you

define as lifeline infrastructure, Mercury or the assets at that site by

First Gas and Transpower? 25

MR GRALA: My understanding, if I recall, when I was preparing the statement I was

focusing very much on the infrastructure that was at the site. I think

just the complex nature of the site makes it -- I've tried very hard to be

clear to talk about Mercury as the landowner and talking about the 30

Mercury site but then there's also all these third party assets there that

would in itself be classified as lifeline infrastructure. So to my mind

when I was putting the evidence together it was the assets that were

there. So it was the power station, I can't recall to what extent it was

the Solar Research and Development Centre but then there's also these 35

other assets that are there. So the First Gas assets, the Transpower

assets, to my mind they were all in a bundle of what is lifeline

infrastructure. I haven't looked into the subtlety in terms of definition

of whether its as an organisation or whether it’s the actual assets that

are there. That is something that I would have to give further thought 40

to.

MS TEPANIA: Without those assets, though - I am going to ask you to

compartmentalise it a bit - First Gas and Transpower, would you still

consider that the Southdown site as you have defined it, Mercury's 45

power station and the solar research, lifeline infrastructure?

MR GRALA: I think, going to your question, that's the reason why they are all

Page 6084


bundled together as lifeline infrastructure in that they're all

interdependent.

MS TEPANIA: Have you assessed it on the basis that they are interdependent?

5

MR GRALA: To a large extent, yes. I think that flows through to -- if you go all the

way down to the conditions and just what Mercury rely on and why

Mercury were keen to keep those assets there because they're symbiotic

in a way in that they all rely on each other to operate. So Mercury can't

operate the power station without the gas, they can't connect to the grid 10

without the Transpower infrastructure so they are all interdependent

and I think once one falls over then everything, like a pack of cards,

starts falling over. So when I think about the intent of the definition,

that is probably what I was trying to do, is trying to bundle all these

things together so they get, I guess, priority over other things. 15

MS TEPANIA: I understand your answer, I have some queries about interdependence,

the extent to which one is dependent on one. Arguably First Gas isn't

dependent on Mercury.

20

MR GRALA: Correct.

MS TEPANIA: Transpower's assets aren't dependent on Mercury.

MR GRALA: I guess it is in the wider sense. So the relationships might not be as 25

strong and you are correct in that they might not be interdependent but

they are dependent. So if you were to put them all on a page and draw

arrows to each other, they might not be going both ways but everything

when you complete the circle probably link back to each other.

30

MS TEPANIA: Okay, all right, well I understand your evidence then.

MR PARSONSON: I have a question. So, as a decision-maker in a planning context, how

do we attribute weight between the views expressed by the lifeline

utility owners and operators, ie in this case First Gas and Transpower, 35

and also KiwiRail is the party reliant on the KiwiRail transformer,

versus the landowner Mercury? It's pretty clear to us through evidence

that First Gas, KiwiRail and Transpower are not as offended by the

proposal as Mercury and they are the owners and operators of those

utilities. 40

[9.40 am]

MR GRALA: I'd agree with that. So I think there's a couple of things. So when you're

looking at it, the first thing that maybe influences how relaxed or 45

comfortable they are with it, they are all requiring authorities and they

have a designation they can rely on. That's the primary designation

whereas Mercury isn't a requiring authority and they don't have a

Page 6085


designation they can rely on. So whatever happens the party with the

underlying designation has effectively power in that their assets don't

get trumped, whereas Mercury don't have that crutch to fall back on.

The other aspect that is quite complicated on the site is that there's 5

Mercury as an infrastructural operator, and so talking about what other

infrastructure they rely on, but there's also Mercury as a land owner in

terms of them wanting to protect their legal obligations. So I guess as

a decision-maker you've got to look at everything. So it's what do First

Gas and KiwiRail and Transpower say in terms of their infrastructure 10

and how it is going to be interrupted, but it's also you've got to be

cognisant as to just because they say it's okay doesn't necessarily take

away the concerns that Mercury have as a land owner and as an

infrastructure provider. As we were talking about just before, they are

not equal in terms of the relationship on how much they depend on each 15

other. So I think it would be fair to say that Mercury rely on First Gas

much more than First Gas rely on Mercury. First Gas probably finds it

convenient that they have a willing landowner where they can put their

assets there and get access to it and maintain it through the pigging

station but they're not relying on Mercury to the same extent that 20

Mercury rely on them. I think you just have to keep that whole view

when you are looking at it.

MR PARSONSON: Well, it's strategic. There's no surprises because Mercury has identified

the strategically important location they perceive because they've got 25

access to those utilities right now, but using First Gas as an example,

there are risks associated with the pigging station and First Gas is

satisfied that it can work through those processes with NZ Transport

Agency and by all accounts relocate the pigging station. KiwiRail's

transformer, again, is an asset that might be moved. Transpower's 30

assets are not so directly impacted but there's going to be pylons moved

at the various locations along the alignment. So they are looking out

for their own interests and taking account of their own risks. Obviously

Mercury is dealing with its own risks. But it's pretty important that

we're clear in our minds who speaks for who here. 35

MR GRALA: Yes.

MR PARSONSON: There's no harm in accepting that self-interest should prevail for all

those parties, including Mercury. 40

MR GRALA: Yes, so I've been very, I guess, cognisant of that through preparing my

evidence and conditions in that I'm representing Mercury on this. I

can't speak for Transpower, I can't speak for KiwiRail, but where I'm

coming from is that there is a benefit there to Mercury that they 45

currently enjoy and they rely on to some extent. So really the question

is whether it's appropriate for the proposal to take that away. I don't

think there's any dispute that all these things add together to make the

Page 6086


site quite unique in Auckland and I certainly don't want to be in a

position where I'm trying to speak for other parties. I don't want to do

that and that's not my intention.

MR PARSONSON: So if the proposal provided ongoing access to those necessary 5

connections, would that get rid of that one element of concern?

MR GRALA: To an extent, yes. It is very difficult to understand if they were to move,

how far that separation could stretch before they don't get the benefit.

I think you just don't know at the moment to know where that cut off 10

is. So if all the gas, for example, was moved and the connection was

retained at the Southdown site, how far can that be moved away from

site? Same with the KiwiRail substation. I just don't know to what

extent that stretch can happen before you start taking away from those

benefits. The one thing that I will say, initially when reading through 15

the application material, is that it was clear that there was a lot of

assessment of the different infrastructure on site and how the proposal

was going to affect them. There was a lot of assessment about how it

would affect KiwiRail infrastructure, Transpower infrastructure, First

Gas infrastructure but there wasn't any assessment of Mercury. So I 20

think they are coming from a different starting point. It is all part of it,

I think.

[9.45 am]

25

MR BICKERS: They want to have sixpence worth as well. Mr Grala, from my

recollection, the term "lifelines" grew out of civil defence response

plans. Is there, to your knowledge, a lifelines plan for the Auckland

region?

30

MR GRALA: Not to my mind. I do know that is the genesis of the term. I know that

Auckland Council were - I don't if it was when they were preparing the

Auckland Plan or the unitary plan - toying about the idea of having a

definition for lifeline utilities and mirroring the response that the Civil

Defence Act tries to do in terms of giving it priority. The genesis is to 35

try and get these things started up.

MR BICKERS: I agree with you. I think that's where it came from. I'm not disputing

much of what you have said. I am challenging the use of the term

"lifelines". It seems to be according a level of priority in this hearing 40

which may not be applicable in its usual sense. So my understanding

was lifelines referred to network utilities and they were network

utilities that had priority in the event of a civil defence emergency to

restore because they were essential to restoring normal business in the

city, or whatever the area was. 45

There wouldn't be any dispute that Watercare's major infrastructure

would be considered to be a lifeline utility. Major transport routes

Page 6087


would be a lifeline utility, Transpower's network would be a lifeline

utility but not, in my view, the generators that input that network. Do

you follow my logic?

MR GRALA: Yes, I think so. When I cast my mind back, I think it was wider than 5

just network utilities when I look back at it. Where the lifeline utility

discussion on this hearing has probably stemmed from is going right

back to some of the criteria that were used in the MCA criteria analysis,

under the constructability criteria there is that lifeline utility criteria and

then it's flowed all the way through to the previous iterations of the 10

conditions that Ms Hopkins had proposed, which tried to assimilate the

network utilities and make it wider than just network utilities and also

incorporate Mercury in the infrastructure that was on the site. So that's

where that use of the term came from. But you're correct that it's from

a different legislation, I think it's just a convenient term that isn't in 15

dispute and that's why it's been brought across.

MR BICKERS: That's my very point. I think the way in which you are applying the

term here is trying -- without disputing all the other things you've said

about strategic nature of the site, you are trying to raise it in a similar 20

way to restoring the network utilities which in a civil defence

emergency become the primary source of action. That's really all I'm

trying to say. I am putting it to you that it might be inappropriately

used in your evidence.

25

MR GRALA: Yes.

MR BICKERS: How do I interpret the shrug of the shoulders?

MR GRALA: Yes and no. I would agree that it's not a perfect use of the term and I 30

think theirs is some difficulties when you start pulling it out of context

into something else, but where it really comes from in my evidence is

saying that there's this absence of any assessment of Mercury's

infrastructure and there's these MCA criteria in the alternatives that talk

about lifeline utilities and it's me really saying, "Hey, if you were going 35

to apply these criteria consistently then you should at least have had

regard to Mercury at that stage" and then everything has probably

followed through from there. It wasn't my intention to --

MR BICKERS: Well, my suggestion is it's not in the same boat. 40

MR GRALA: I would disagree.

[9.50 am]

45

DR PRIESTLEY: Mr Grala, this has really got back to where Mr Mulligan endeavoured

to start so just listen carefully to me. Lifeline infrastructure is of

necessity an emotive term, isn't it? It suggests that if something

Page 6088


happens to it people are going to die, correct?

MR GRALA: Yes, it's critical to life, I would say.

DR PRIESTLEY: Exactly. 5

MR GRALA: It's the core function.

DR PRIESTLEY: That, as Mr Bickers has said, could certainly apply in a city of

Auckland's size to Transpower lines coming in and water supply. 10

Agreed?

MR GRALA: Correct.

DR PRIESTLEY: But it can't really apply to a thermal power generation station which 15

has been mothballed and which has the turbines taken out, which would

take some months to recommission, would you agree?

MR GRALA: I don't think I can agree with that, sir.

20

DR PRIESTLEY: You don't agree?

MR GRALA: I don't think I can.

DR PRIESTLEY: Well, maybe but I'm testing why you use this expression. Tell me why 25

you don't agree? People aren't going to die if Mercury can't get up and

running for four months, are they?

MR GRALA: It depends, the Transpower infrastructure is no good if there's no

electricity supplying it. We heard last week from Mr Murray who gave 30

a really good account about their role that the thermal power station

will have in times of demand. I don't think it was the intent to start

defining lifeline utilities as all this electricity infrastructure with

nothing supplying it because then it's just infrastructure with nothing

behind it. I don't think you could artificially take away the generators 35

from all the rest of the electricity infrastructure.

MR BICKERS: But Mercury's Southdown site is not supplying power. So we have this

civil defence emergency and in order to activate the lifeline plan

Mercury then proceeds on a three to four month process of bringing the 40

turbines back. I think the disaster might be over by the end of that.

MR GRALA: Correct, if that was today. But if it was in six months' time it might be

different.

45

MR PARSONSON: How?

MR GRALA: Well, if Mercury decided tomorrow that they wanted to operate again

Page 6089


and it took them four months to operate the power station and a civil

defence emergency happened in six months, the power station would

be operational.

MR PARSONSON: Yes, but it's has been Mercury's evidence that they are not planning to 5

start up the power station any time soon but they want the ability to do

so.

MR GRALA: Correct. But Mr Murray last week was really good at explaining that

they don't actually know that. So that was their current intentions but 10

they don't know all these things that could happen that could force them

into a position where they would do that.

DR PRIESTLEY: All right. Mr Mulligan, it has been like a maelstrom of shot and cannon

fire all over the place here but you might like to continue your cross-15

examination at any point you think appropriate.

MR MULLIGAN: Thank you.

DR PRIESTLEY: I think you can read us on lifeline infrastructure. 20

MR MULLIGAN: Yes. I will just touch on a couple of your questions, though, Mr Grala.

Just to confirm that in terms of the First Gas assets, they're there

because Mercury is a potential client, a potential user of gas, aren't

they? 25

MR GRALA: I'd agree with that, yes.

MR MULLIGAN: To the extent that Mercury is not a user of gas, they have removed the

metering equipment, removed the supply line directly into the site? 30

MR GRALA: My understanding in reading through some of the evidence that First

Gas have provided is that they have taken away some of the

infrastructure that Mercury used when they were operating but the

intent was that if Mercury restarted they would just re-establish it. 35

MR MULLIGAN: When they are going to pay them for some gas they will put the pipes

back in?

MR GRALA: Yes. 40

MR MULLIGAN: In terms of KiwiRail, they've just got a transformer that runs their --

well, it's Transpower's transformer but it runs their electrified lines,

Page 6090


doesn't it?

MR GRALA: Yes, correct.

MR MULLIGAN: The trains aren't stopped at the moment, are they? 5

MR GRALA: No.

MR MULLIGAN: Because it doesn't rely on Southdown at all, does it? It's just a location

for that transformer. 10

MR GRALA: My understanding is it's their primarily as a result -- it's not there

because of the Southdown Power Station, it's there because of the

Transpower substation that's there and it's convenient that it's next to a

substation and the rail line, but I would have to take Mercury's advice 15

and reasons why they were there.

MR MULLIGAN: In terms of the Transpower substation, that hasn't closed down, that's

still operating, isn't it?

20

[9.55 am]

MR GRALA: Correct.

MR MULLIGAN: Because, again, that doesn't rely upon the Southdown facility at all, it's 25

just a location for that Transpower substation?

MR GRALA: Yes, I'd agree with that, yes.

MR MULLIGAN: In terms of Transpower, they don't have a designation over that site, do 30

they?

MR GRALA: No, my understanding is that they've got resource consents that

establish that. I would have to talk to Mercury about the reasons why

Transpower chose to locate there but I would have thought that it was 35

convenient because it is close to the National Grid and there's existing

infrastructure there. So there would be benefits to them locating there.

MR MULLIGAN: The lines that that run to and from that, they don't have Transpower

lines, they don't have a designation either? 40

MR GRALA: I would have to check that. I'm not sure off the top of my head. I know

a lot of the Transpower assets -- National Grid lines aren't designated,

some of the newer stuff is.

45

MR MULLIGAN: In terms of this issue then of symbiosis, isn't it more analogous - and

there's probably a technical term for it - the entity that relies on these

other assets -- in the end, it's just Southdown locating itself near other

Page 6091


assets. They don't need Southdown, Southdown needs it; isn't that

really the situation?

MR GRALA: I don't know if it's quite that simple. I think it's all part of a wider

reliance in terms of the infrastructure network, but my understanding 5

was that the power station was there first and then Transpower

established the substation and then the KiwiRail substation was

obviously established there as well. So, the interrelationship between

them is probably not as strong both ways and I can't talk for

Transpower about why they chose to locate there, but presumably there 10

were some benefits because they chose to locate there rather than

anywhere else.

MR MULLIGAN: Now, you were involved, I took from your evidence, on behalf of

Mercury or perhaps Mighty River Power in the proposed Auckland 15

Unitary Plan process?

MR GRALA: Correct, yes.

MR MULLIGAN: As a result of that -- well, through that process, Mercury were seeking 20

some specific recognition of its assets in Auckland, including

Southdown, is that correct?

MR GRALA: Certainly, through the Auckland Plan before the unitary plan they

sought that and they got that. I can't recall through the unitary plan 25

submission what the exact relief they were seeking was.

MR MULLIGAN: I'll just get you to have a look at some evidence that was prepared by

Mr Colson on behalf of then Mighty River Power. Who's Mr Colson?

30

MR GRALA: His title is planning -- he might be the planning manager or

environments manager for Mercury.

MR MULLIGAN: I'll get you to have a look at paragraph 3 of that and just have a brief

read of paragraphs 3.1 to 3.5. 35

[10.00 am]

Now, would you accept that you were involved in the process?

Effectively, what this says is that Mighty River Power were seeking to 40

advance some relief in terms of the unitary plan, the then proposed

unitary plan, but a decision was made to close down or perhaps

decommission the station and, therefore, Mighty River Power was not

going to pursue that recognition within the unitary plan?

45

MR GRALA: Yes, that's what the statement says.

MR MULLIGAN: Would you accept that that decision in relation to both the unitary plan

Page 6092


but also the closing of Southdown has, based on the evidence of

Mr Colson, been after quite an extensive process of looking at the

options and looking at the ways that the site may be able to be used and

not closed? Would you accept that?

5

MR GRALA: That's certainly what the statement says is that it's not a decision they've

taken lightly. It was at that point of time, I guess, at April 2015, that

was the position they had.

MR MULLIGAN: Yes. Now, perhaps if we can introduce that as an exhibit. 10

MS DUFFY: Twenty-nine.

MR MULLIGAN: Twenty-nine. I see there at paragraph 5.1 that as part of this decision

to close down, Mighty River Power determined that it didn't need to 15

pursue some advantageous measures it was seeking in terms of its air

discharge consents or its air discharge environment. Do you accept

that?

MR GRALA: Yes. When I cast my mind back, I think that was one of the main 20

themes to the Mercury submission was talking about how they could

provide for not only the operation of the power station, but back when

the unitary plan was notified they were also looking at expanding the

power station. So, I think one of the things this does show is just how

quickly things change. From 2013 they're looking at expanding the 25

power station to a year and a half later saying they're closing it, so it

probably just illustrates how dynamic it is.

MR MULLIGAN: Yes. However, if that were indeed the case, you would accept that the

unitary plan is generally on at least a ten-year planning framework, so 30

if there were uncertainty about what the future of Southdown might be

that caution would dictate you'd stay in the game, wouldn't you?

MR GRALA: I'm sorry, I can't talk for Mercury about why they decided to pull those

parts out. I wasn't part of that discussion. 35

MR MULLIGAN: But you were involved in the unitary plan process?

MR GRALA: I was their planning expert but I wasn't involved in any corporate

decisions. I just got advised on what course they were taking. So, after 40

this we really focused on their Metrix business and they handled the

rest of the unitary plan elements in-house. I wasn't involved in that.

MR MULLIGAN: If you were giving Mercury planning advice about the unitary plan

process, you would tell them that it would be prudent that if they had 45

any intention at some point in the future, in the next ten years, to open

they should continue to pursue their relief in the unitary plan process.

Page 6093


Wouldn't that be the prudent advice you'd give?

MR GRALA: As a general principle I would say yes, but what I would say is that my

understanding is that they did stay involved to a limited extent but they

didn't seek an offsetting policy. The offsetting was really there to 5

enable the power station to be expanded, but it wasn't necessary for

their operation of the existing power station because by this stage they'd

already secured their air discharge consents to 2037, which is well

beyond the unitary plan.

10

So, what I would say is that if it was me making the decision I'd say to

be involved, but it would be up to them to what extent and how much

resources they threw at it. It was really Mr Colson and Mr Graafhuis

who stayed involved in the unitary plan process, but in terms of

spending resources I wasn't involved in the components that were 15

relating to the Southdown site.

[10.05 am]

MR MULLIGAN: If you wanted to keep a window open not for expansion but for your 20

current use, you would as a planning professional not recommend that

you make a big song and dance about how you're closing, like has been

done in the evidence here?

MR GRALA: What I would say is that I think I would have the responsibility to the 25

panel if I was seeking a whole lot of provisions and had been involved

through the whole hearing saying how important it is Mercury is going

to expand the power station and they need all these complementary

provisions. If they then made a call that that expansion is not on the

cards again, then I think you would have a responsibility as a planner 30

to tell the panel that. I think that's what this -- when I read this, this

statement is very transparent. It's telling them what their intentions are

and it's saying Mercury is not going to go for this offsetting regime so

you don't have to worry about it.

35

MR MULLIGAN: Yes, that's all interesting but it's not really the question I asked. I'm

asking not about expansion but about if you just wanted to keep your

existing operations alive, which is the answer that you gave, if you

genuinely thought that you might start the station again under that

current envelope, you wouldn't make a song and dance about closing 40

it, would you?

MR GRALA: I think the answer is very similar to the one I gave you. I think I would

be very transparent to the panel about my intentions. If I was Mercury,

I would be very transparent with my intentions on whether they're 45

going to need those provisions. I as a planner wouldn’t be telling

Mercury to drop out of the process if they wanted to keep operating and

my understanding is that they didn't do that. They're here. They're just

Page 6094


signalling that they're going to close the power station, because that's

my understanding was their decision at the time, and they don't need to

go for these offsetting provisions.

MR MULLIGAN: Just going back to this issue of closure as far as NZ Transport Agency 5

was concerned in its assessments, you've indicated I think today that

you see that as a fundamental error in terms of the analysis or one which

began early and has had knock-on effects. Is that fair?

MR GRALA: Yes, I don't think I used the word "fundamental", but I think as a 10

planner looking in from the outside that was the clearest I guess chance

of why they prepared the applications as they were.

MR MULLIGAN: Are you aware as a result of the evidence that's been given in this

hearing that despite Mercury telling the market, despite Mercury telling 15

the AUP panel that Southdown was closed, that in consultation with

NZ Transport Agency about this project Mercury made it very clear

that it wanted to keep the option open to reopen it. Are you aware of

that communication?

20

MR GRALA: I'm aware, reading through a whole lot of the information, that they

kept a pretty consistent message that they wanted to -- I think they used

a term like wanted to rely on their consents to operate the power station.

MR MULLIGAN: Are you aware that from late 2015 Mercury was saying, "We want to 25

keep the option open of the 135 megawatts" to NZ Transport Agency

and that NZ Transport Agency, through 2016, was investigating with

Mercury the implications of that and how the road and station could

operate together?

30

MR GRALA: I wasn't involved in that but that's my understanding that they were --

they signalled that they wanted to keep the option open to restart and

they were -- I think they were talking about some of the aspects about

access.

35

[10.10 am]

MR MULLIGAN: When you say in your evidence at your paragraph 3 of your evidence-

in-chief that by assuming that the plant was being decommissioned

rather than being mothballed that NZ Transport Agency committed a 40

fatal error, you accept now that that statement is wrong?

MR GRALA: I don't accept that. What I do say is that in that paragraph what I'm

trying to do is come up with the only reason that I could see why none

of the application materials mentioned Mercury at all or they didn't 45

provide an assessment of effects in terms of how they can cohabitate

the site, the impacts they would have on the power station, whether

they considered them in the alternatives. So when you look at that and

Page 6095


at the background and all the discussions that Mercury had with

Transpower, the only thing that I could see was that maybe through all

these discussions - and I'm not saying they didn't happen, I definitely

am aware that they were quite long - NZ Transport Agency

misunderstood what they meant about decommissioning. That was the 5

only reason that I could think of when I was preparing the statement as

to why they took the approach that they did.

MR MULLIGAN: Well, you've actually outlined in your paragraph 83 references in the

AEE to Southdown, page 28 of your evidence-in-chief. It makes 10

reference to the plant being mothballed, which is what you say should

be done, that is how it should be treated, and it says:

"While the new road does not avoid this site, the design has sought to

maintain opportunities for future use of the key physical assets on this 15

site."

Isn't that exactly consistent with the long-winded and long-running

discussions between NZ Transport Agency on the one hand and

Mercury on the other and NZ Transport Agency asking, "How do we 20

design our road so that you can continue to operate your site?" Isn't

that statement absolutely consistent with that type of discourse?

MR GRALA: That statement is from the AEE which from memory is the only

reference that any of the application materials referenced the 25

Southdown Power Station. When you read it, it is -- you can see that

at that stage NZ Transport Agency were trying to accommodate the

road and the power station but to what extent they were going to do

that and whether they'd covered all the aspects they needed to, I'm not

confident or I wasn't convinced when I was reading this that they'd 30

done that.

MR MULLIGAN: But going back to your original statement in paragraph 3 of your

evidence-in-chief, you suggest that all of this has been a big surprise

that it was going to reopen, but that is just not the case, is it? The 35

evidence doesn't stack up.

MR GRALA: I think you're overplaying what I'm trying to say there. What I'm trying

to say there is that the only reason that I can see why there is this

absence of assessment of the power station is if they, for whatever 40

reason, took a view that it was okay to co-locate there, either because

it was decommissioned or they mistakenly thought that it was safe to

co-locate there, even if it was operating. You can see that through a lot

of the application and the material where it is talking about maintaining

a 7-metre access or something like that. So I don't think just because 45

they considered part of the aspects that they needed to think about that

that was a full assessment of all the things that they needed to do.

Certainly me, as a planner, I think you don't just limit your assessment

Page 6096


to things like access. You think about all the other potential effects of

co-locating there.

MR MULLIGAN: Mr Grala, your statement in paragraph 3 says that in assuming that it

was decommissioned that there has been an error and I take from your 5

definition of decommissioned as closed, kaput, finished. Do you

accept that that statement, if that is how it is being read, is wrong

because NZ Transport Agency understood when it assessed that the

station might operate? Do you accept that statement is wrong?

10

[10.15 am]

MR GRALA: What I would say is that I would agree that this is from the assessment

of environmental effects and it does reference that NZ Transport

Agency were making attempts to ensure that the opportunities -- that 15

the site could be operated. But from when I was preparing this

statement it wasn't clear to me why, I guess, there was these

inconsistencies through the application material and why this was --

there was only references every now and then to the Mercury Power

Station site and to that extent it wasn't always talking about the site as 20

nationally significant infrastructure and an operating power station. It

was talking about the number of advantages that was there, but I think

in that paragraph 3 I'm not trying to make a grand statement that NZ

Transport Agency completely forgot about the site. I'm just saying that

I think the only reason that I can think of as to why there is these 25

inconsistencies and lack of assessment is that maybe one of the reasons

is that they misunderstood. I'm not saying it is the reason; I'm just

saying maybe that is what it was.

MR MULLIGAN: That was in your evidence-in-chief. Do you accept now, given all of 30

the evidence of the depth of discussion that took place between

qualified people at Mercury and NZ Transport Agency about how the

station would operate and how the road and station would operate

together, that there was no confusion by NZ Transport Agency that the

site, Southdown, may open? Do you accept that now at least after this 35

evidence?

MR GRALA: I don't think it is as clear-cut as that because I think at different parts of

the process they had different understanding. I'm sure by the end of it,

by the end of when they were actually putting together the application 40

material, they were aware that the power station might restart, because

that is what Mercury had always talked about is relying on their

resource consents. But what I'm saying is that that is not consistent

through all the process that NZ Transport Agency followed.

45

MR MULLIGAN: Could it be that the references and the relatively benign references in

the AEE simply reflect the fact that Mercury was telling NZ Transport

Agency that co-location was completely possible? Is that one

Page 6097


possibility for the references in the AEE?

MR GRALA: It could be one reason, but what I would also say is that as a planner I

wouldn't just take what Mercury might be saying in some bits of

communication as a full assessment of effects. I think I would 5

interrogate and ask: what are the things that they need to cover? Is it

just access or is it other things? It is very difficult to cover this when I

wasn't involved in the process and I was relying on the correspondence

that I had with Mercury at the time when I was preparing to this as to

the account that they had. I wasn't involved in those discussions. 10

MR MULLIGAN: Yes, and I want to turn to that because that was in your evidence-in-

chief, but the difficulty that I have with your position is that you've

repeated it in your summary that was filed on Wednesday, paragraph

3: 15

"Due to NZ Transport Agency's misunderstanding about the status of

the Southdown Power Station in its application it only assessed the

Southdown site as an industrial property."

20

[10.20 am]

So you seem to be repeating the same thing again, earlier this week.

MR GRALA: Because what I'm talking about there is a point of time when the 25

applications were lodged.

MR MULLIGAN: But you know since filing your evidence-in-chief, because of all the

evidence that we have heard over the last few weeks, that there were

ongoing discussions between the appropriate people at Mercury telling 30

NZ Transport Agency the site was going to operate. You've accepted

that.

MR GRALA: I'd agree that that's what Mercury are saying, but what I'm saying is that

it's not clear that that was fully appreciated by NZ Transport Agency 35

when they were preparing their applications.

MR PARSONSON: Could I ask a question? Mr Grala, just as a starting point, section 11.4.3

of the AEE, bullet point, Southdown Co-generation Plant on Hugo

Johnston Drive, is currently under care and maintenance. I will agree 40

that there's not a dedicated long discussion section in the AEE on all

the range of potential effects on that site but it does discuss it through

options analysis sections balancing between Anns Creek and that site

in various ways. Have you had an opportunity to look through Mr

Wickman's rebuttal evidence where he has a number of attachments 45

with quite an extensive range of correspondence between Mercury and

Page 6098


NZ Transport Agency?

MR GRALA: I have. That was one of the appendices where it was going right back

to early --

5

MR PARSONSON: There's a lot of emails and exchange of data, minutes and all sorts of

letters as well. Would you agree that a lot of that correspondence

predates the lodgement date of the application?

MR GRALA: From memory, yes. 10

MR PARSONSON: Yes. A lot of it was -- I guess one of the key moments in that appendix

was the 18 December 2015 email from Mercury saying, "Look, hey,

we still want to just put that into care and maintenance, we may restart

the site". But then there's a lot of correspondence provided through 15

2016. There's letters from Mr Gibson or emails from Mr Gibson and

Mr Colson and they keep reiterating the importance of bearing in mind

the station may restart, "But it's looking pretty good" they keep saying.

Things seem to be going okay. This is subsequent to the exchange of

dimensions and heights and equipment and all sorts of stuff that 20

Mercury staff have been providing. One indication by Mr Graafhuis

that the preferred property ownership would be a strata title. So there's

a whole lot of information there prior to the lodgement date that sees

people interacting on ways it seems that the two things could coincide.

In retrospect, now we have that information in front of us, does that not 25

change the way you would state your position in terms of NZ Transport

Agency's understanding of what Mercury hope to do with the site?

MR GRALA: That is a difficulty I had in reconciling all of that discussion that had

happened through 2015 and 2016. What I would say is that it was hard 30

to reconcile that with the fact that they wanted to keep operating with

the fact that there was very little in the applications as they were lodged

that talked about how they would achieve that and the conditions that

they would put in place to ensure that that would happen. There was

none of that. 35

I do remember struggling when I was reviewing the material to

reconcile that background, which I was aware of. I hadn't been

involved in those discussions but for me I just couldn't understand why

there was all those discussions and it was so long -- it spanned quite a 40

long period of time to this gap of information where presumably the

same dialogue was happening with all the other infrastructure providers

and there was lots of references in the application about how they were

going to either relocate or accommodate that infrastructure. But there

was this big gap where there was nothing on how Mercury were going 45

to ensure -- and what steps they were going to take to ensure that that

power station was going to be able to be restarted. Yes, there might be

references there, but they are not very detailed or don't have any depth

Page 6099


behind them to talk about how they are going to do that.

[10.25 am]

MR PARSONSON: So is it better to encapsulate your position that NZ Transport Agency 5

was aware that the power station may restart but, in your opinion, they

hadn't given adequate detail of the assessment of effects of co-locating

the road with the power station?

MR GRALA: I don't want to talk for NZ Transport Agency, because I can talk to what 10

approach they had, I'm just saying that as a planner on the outside that

was a possible reason I had. So it might be that they had a different

reason but at the end of it all those discussions didn't actually flow into

an adequate assessment of effects.

15

DR PRIESTLEY: But you are speculating to some extent about NZ Transport Agency

because you've not once but several times suggested that they've

misunderstood what closing the power plant meant.

MR GRALA: Yes, I would agree with that. 20

DR PRIESTLEY: So it's not as simple as that, is it?

MR GRALA: No, and it's not a slay on NZ Transport Agency, I'm just saying as a

planner, looking at everything, that was a reason why they may have 25

had all these discussions and then there's this gap.

DR PRIESTLEY: Given what you now know, with the matters Mr Parsonson's put to you

and what's in the AEE, do you agree that the explanation you've

proffered is not as simple as that? 30

MR GRALA: I'd agree with that, yes.

DR PRIESTLEY: Right, Mr Mulligan.

35

MR MULLIGAN: Thank you. When you prepared both your evidence-in-chief and

subsequently, were you in contact and received input from Mr Colson

and Mr Graafhuis from Mercury?

MR GRALA: When I was preparing my evidence? Yes. 40

MR MULLIGAN: Did they outline to you the level of communication which occurred

between Mercury and NZ Transport Agency about the effects of co-

location?

45

MR GRALA: There would have been some discussions about it, for sure. I'm trying

to cast my mind back to what those were. Not in detail. I mean, I

wouldn't have had any -- I wasn't given any emails that Mr Wickman

Page 6100


included but what they were clear to me was that what was important

was that they wanted the ability to restart the power station. So I think

the position that they had inferred was that that was their main goal.

They wanted to make sure that they could keep that power station ready

to restart. 5

MR MULLIGAN: Given your answer to the questions from the Board about these

conclusion that NZ Transport Agency was mistaken, do you accept

now it would have been helpful in preparing your evidence to have had

the information about the level of interaction between NZ Transport 10

Agency so you didn't have to speculate?

MR GRALA: Yes, that probably -- any information that you get is helpful. With the

benefit of hindsight now, I still don't understand how all that discussion

had led to an AEE and application material that didn't have the 15

sufficient assessment that I thought it would.

MR MULLIGAN: But you've already agreed that one explanation for that is that at the

point it was filed NZ Transport Agency and Mercury had reached a

happy agreement about the ability to co-locate and the requirements for 20

doing so. That might be the explanation as to why there wasn't a great

deal of assessment, couldn't it?

MR GRALA: As a general principle, that would could be one reason but I wouldn't

want to -- 25

MR MULLIGAN: In terms of some of the effects that you have raised, do you accept it

would have been helpful for Mercury, Mr Colson, Mr Graafhuis to tell

you that Mr Annandale had suggested that alignments that went

through the car park and through the station were not acceptable but 30

that one that went to the south and, at a minimum, just clipped the south

end of the site -- do you think it would have been helpful if they'd

conveyed that information to you? That Mr Annandale suggested

going to the south?

35

[10.30 am]

MR GRALA: It's difficult for me to tell. I'm not sure, sorry. I think more information

is always helpful but whether it would have changed my view on

whether the applications were full, I'm not sure. 40

MR MULLIGAN: Would it have been helpful to have received information from Mr

Graafhuis and Mr Colson that during the course of discussions Mercury

had provided prices for removing the WETSACC and for removing

that cooling facility in there because they anticipated that and hoped 45

NZ Transport Agency would pay for it. Would that have been helpful

Page 6101


information for you to have in your evidence preparation?

MR GRALA: It may have been helpful but I don't know if it would have changed my

ultimate view on it.

5

DR PRIESTLEY: Mr Mulligan, don't worry about time, we started slightly late, we had

race track interruptions so run it on for another ten minutes or

thereabouts, if you want.

MR MULLIGAN: Presumably it must have been very important, if not critical for you to 10

know that your client, Mercury, had a hand in choosing this alignment?

MR GRALA: Sorry, I think it's important to talk about alignments and corridors.

MR MULLIGAN: I said alignment. 15

MR GRALA: Yes, I know that but what I'm saying is that there's also decisions about

whether there was corridors that missed the site at all. So, yes, talking

to Mercury might help choose what alignment you're going to take once

you decide to go through that section but whether that means it should 20

go through that section at all, I don't know if that necessarily helps that.

MR MULLIGAN: We will come back to the question I actually asked, but the corridor

that was originally proposed went through the car park. You would

accept that the safety hazard risks that have been laid in technicolour 25

by Mercury wouldn't exist or at least to the same extent if the alignment

went through the car park?

MR GRALA: By the car park are you talking about the solar research and

development centre? 30

MR MULLIGAN: Yes.

MR GRALA: I would have to take Mr Phillis's view on that. I couldn't make a

judgement on whether the risks would be different. It would just 35

depend on where through the solar research facility centre it went. If it

went through the mirror side and it went over the top of the turbines on

the other side, I don't know if it would necessarily be any different, but

I would have to talk to Mr Phillis about that.

40

MR MULLIGAN: Going back to the alignment, and again in terms of this alignment, isn't

it critical for you to give evidence to understand that Mercury played a

hand in choosing this alignment in discussing it going up through

cooling towers which could be removed at NZ Transport Agency's

expense? Isn't that critical for you to do a proper planning assessment 45

Page 6102


to do proper planning evidence?

MR GRALA: It's helpful, yes. I'd agree with that. It's helpful.

MR PARSONSON: Mr Mulligan, I have an alignment question but I don't know when it's 5

an appropriate time to ask it.

MR MULLIGAN: Yes, now is fine.

MR PARSONSON: Yes, thanks, Mr Grala. In terms of the alignment options, are you 10

aware of options 1 through 5 that were considered in relation to this

site?

MR GRALA: Yes.

15

MR PARSONSON: One of them I think, four I think, actually dived lower down to the south

of the Southdown site through Anns Creek. I must confess that when

we were asking questions of Ms Linzey in particular in terms of option

selection and alternatives assessments, it's not intuitively the first thing

an organisation would do would be to put a road on top of a power 20

station. So, we sort of interrogated that quite carefully, but the upshot

of our understanding is that there is a balance between impacts on Anns

Creek, the potential alignment as it's currently proposed and alignments

that had a greater impact on the power station or to the north of the

power station, and we've got before us the alignment we have. 25

As a planner then, what's your approach to weighing up the potential

impacts on Anns Creek, which has got identified nationally significant

values, obviously, in rare species, versus seeking to achieve a

manageable level of effect in terms of encroaching on an adjacent 30

property? How do you weigh those things up?

[10.35 am]

MR GRALA: It was quite helpful; we spoke about this at the facilitated Southdown 35

meeting and there was quite good discussions with Ms Rickard and

Ms Linzey. I can't remember if Ms Hopkins was there, but they were

talking about those five options, why the one that is shown was

pursued. That was primarily Anns Creek and I think there might have

been some geraniums that the ecologist had said, "You just cannot 40

touch this because it's so valuable".

That's the difficulty, isn't it? How do you weigh up -- once you've got

that span that you've decided to go through, how do you navigate

through when you've got all these different sensitive uses? I would 45

have thought that it's a case that you've got to just pick the best practical

option and try to thread through it. That's the difficulty that I have with

getting to that stage is that by that stage they'd chosen a corridor that

Page 6103


had to go through all these things. It had to either weigh up the

ecological effects or it had to weigh up the risk and health and safety

effects to people. They're both part 2 matters, so how do you weigh

that up? I don't have an answer for you; very difficultly I would have

thought. 5

MR PARSONSON: If through discussion with a property owner such as Mercury there had

been an exchange of information that suggested that it might be

possible to co-locate, would that give you as a planner some incentive

to see the extent to which you could avoid impacts on nationally 10

significant ecology?

MR GRALA: Yes, I can see why they -- I can understand why they chose that

alignment. I don't think it avoids the impacts on the power station or

that area as well as if they had have chosen a corridor that didn't go 15

through there in the first place, but I can see the approach that NZ

Transport Agency have taken in terms of having all these constraints.

You can see they've tried to weave their way through it.

MR MULLIGAN: Just in terms of that consultation process and balancing, surely you 20

would accept that it's best practice and in some respects the only

practice to take your information from the operator of a large piece of

infrastructure about the impacts of your proposal. Is that a fair

approach?

25

MR GRALA: I'd accept that as a general principle that you're informed by people who

are best placed to tell you that, and in this case there's not too many

people that operate power stations so Mercury would be a good place

to start.

30

MR MULLIGAN: So, if you want to assess the impacts of your particular proposal and of

co-location you wouldn’t make assumptions yourself. A road builder

like NZ Transport Agency wouldn't make assumptions, would it?

MR GRALA: Agreed, so you would ask questions about what's important and what 35

they need to do in order to co-locate there if that was ...

MR MULLIGAN: That would be in terms of the ... Mercury would be the source of the

information in terms of its operational requirements in terms of space

and distance between the two? 40

MR GRALA: Yes, I'd agreed with that. You would ask what they need operationally,

but you might also decide to bring someone on to the team that has an

experience in that that can offer a counterview. I wouldn't feel

comfortable as a planner just relying on talking to effectively 45

submitters or affected landowners about what they need to do, but it's

certainly part of something that we do as planners is ask questions

about what their concerns are and what they need to address and how

Page 6104


the proposal needs to accommodate that.

[10.40 am]

MR MULLIGAN: You would essentially bring someone on board on your side of the 5

table, though, wouldn't you, to determine whether the landowner is

telling porkies and talking up the effects on their property generally,

wouldn't you?

MR GRALA: I think that's the approach you take to any experts. If it was a traffic 10

dispute, an applicant has their traffic planner and the Council has their

traffic engineer, sorry, and a submitter might have their traffic

engineer.

MR MULLIGAN: In terms of the operator, you would expect that they would have, having 15

operated the site under the health and safety regime, some

understanding of the safety implications of its operations, wouldn't

you?

MR GRALA: Yes, I would agree that they are best placed to know that. What I would 20

also say is that from talking to the Mercury team is that the more you

think about things and the more time you have to think about things,

you can work these through in more detail and issues arise. I think

that's clearly what's happened.

25

MR MULLIGAN: So are you saying that you're resiling from your position that NZ

Transport Agency misinterpreted all of this situation and, in fact, the

explanation is that Mercury has had a rethink about the implications of

this road? Is that now your --

30

MR GRALA: No, no. It's not what I'm saying.

MR MULLIGAN: Well, I don't know what you're saying then.

MR GRALA: What I'm saying is that there was clearly a lot of communication 35

between NZ Transport Agency and Mercury. I wasn't part of those

discussions, but from what I am aware it was discussions about the best

place to accommodate the power station site. But it's not clear to me

how the application material reconciled those discussions.

40

MR MULLIGAN: Are you aware that those discussions included the person identified by

Mr Flexman as the safety guru on the site, Mr Fox? Are you aware that

he was involved in those discussions?

MR GRALA: I'm not aware of that, sorry. 45

MR MULLIGAN: Are you aware that in February 2017 at 11.26 am, 7 February,

Mr Graafhuis sent an email outlining the issues to NZ Transport

Page 6105


Agency making reference to safety issues but indicating that they were

solvable by certain mitigation measures, a wall? Are you aware of that

email?

MR GRALA: Was that included in the appendix of Mr Wickman? Then I've read it 5

but I can't recall it.

MR MULLIGAN: Yes, it was included in that. That might be an appropriate point for a

break, sir.

10

DR PRIESTLEY: All right. We'll take the morning tea break. Thank you.

ADJOURNED [10.43 am]

RESUMED [11.00 am] 15

DR PRIESTLEY: Thank you. I just need to remind counsel, not from any position of

anxiety or control at this point, that we do, with the venue

arrangements, need to complete this by 1.00 pm. Yes, Mr Mulligan.

20

MR MULLIGAN: Thank you, sir. Mr Grala, just to round out what we were covering

prior to the break, you indicated that you had trouble reconciling the

interaction between Mercury and NZ Transport Agency. I was

wondering whether the trouble that you're having in terms of

reconciling these positions is Mercury's position now and how this is 25

an unacceptable scenario and having trouble reconciling that with the

fact that Mercury played such an important hand in the alignment being

where it is. Is that the thing that you're struggling with? I am.

MR GRALA: It's very difficult to answer that. Where I struggle is that there was such 30

a long discussion between the two parties but irrespective of who kind

of said what, it doesn't seem to have flowed through to the application

material. I don't want to kind of labour it but I can't talk for Mercury

and talk for NZ Transport Agency about what happened in those pre-

lodgement discussions. But what I would thought is if as NZ Transport 35

Agency are saying -- if that assumption was correct then you would

have thought that the application material would have an assessment to

demonstrate why all those things that Mercury were wanting would

have been provided for. So relying on their consents, an operable

power station, I would have thought that the application material would 40

include an assessment, would include conditions that actually provide

for that, but on the converse, if Mercury were saying things that NZ

Transport Agency misunderstood then the same result might happen.

That is maybe why the gap was there but I don't want to sort of

speculate for NZ Transport Agency as to why that was there. It's very 45

hard to reconcile and I don't know what the scenario would have been

like in order for that gap not to have been there.

Page 6106


MR MULLIGAN: Well, you indicated in your answers to earlier questions that through

this process and through time Mercury had reconsidered its position in

terms of cohabitation. That's correct, isn't it?

MR GRALA: What I -- I haven't -- that's from me reading the legal submissions for 5

Mercury that talked about them thinking things through further. It is

not through discussions that I've had with Mercury.

MR MULLIGAN: Is one explanation for that reconsideration that Mr Whineray found out

about what Mercury employees had agreed to and was brassed off with 10

that? Is that one reason for reconsideration?

MR GRALA: I wouldn't want to speculate on that.

MR MULLIGAN: Okay. Now, just turning to your conferencing session with 15

Ms Rickard, that was in respect of the existing environment, as I

understand.

MR GRALA: The first one?

20

MR MULLIGAN: Yes. I can't remember. It was one directed by the Board, 11 July.

MR GRALA: There was the one direction and I think we met twice because we asked

for some further clarification on the effects identification.

25

MR MULLIGAN: There was one on 11 July which related to the receiving environment.

You've got that witness statement, joint witness statement?

[11.05 am]

30

MR GRALA: I'm sure I have it. If you just give me a minute, I can locate it. 11 July,

was it?

MR MULLIGAN: Yes.

35

MR GRALA: This is it here. I don't think it has a date on it. Is it this one?

MR MULLIGAN: It is a joint witness statement that you signed on 11 July.

MR GRALA: Yes, got it. 40

MR MULLIGAN: As part of that you agreed that the existing environment included the

future state of the environment as it might be modified by the utilisation

of permitted activity. Right? Is that correct?

45

MR GRALA: Correct.

MR MULLIGAN: And that the future environment also included the environment as it

Page 6107


might be modified by the implementation of consents that were

granted; correct?

MR GRALA: Correct. So that is 2.2(b) and (c), I think.

5

MR MULLIGAN: You would accept in terms of as a general proposition that idea of the

implementation of consents comes with it the requirement that the

implementation be likely? That is the conventional wisdom?

MR GRALA: Yes. That is the approach, so that is the last aspect of (c) talks about 10

that.

MR MULLIGAN: That is the point where a real world analysis needs to be undertaken of

the question of whether the activity might occur?

15

MR GRALA: Yes, I agree with that.

MR MULLIGAN: And that shouldn't be an artificial exercise?

MR GRALA: Agree. 20

MR MULLIGAN: Again, more generally you'd accept that the scope of a consent, the

nature of a consent is defined by its conditions?

MR GRALA: Well, it is defined by the proposal but I guess it's influenced by the 25

conditions as well as part of it.

MR MULLIGAN: You have the activity, the central activity that needs to be consented

but let's say it is a piece of kit that makes a noise. The activity is defined

by any noise limits that might be imposed through conditions. 30

MR GRALA: So the conditions might set the parameters, I think is what you're

saying, of what the proposal might be.

MR MULLIGAN: Ultimately the envelope of effects is created by the activity along with 35

the conditions?

MR GRALA: Correct.

MR MULLIGAN: So the extent to which one is looking at the consent and consents as 40

part of the existing environment, you need to consider that envelope of

effects created by the conditions?

MR GRALA: It's not just conditions but, yes, it's part of it.

45

MR MULLIGAN: No, sorry, not just conditions but that's part of the --

MR GRALA: Yes, part of it.

Page 6108


MR MULLIGAN: As part of your evaluation of what is the existing environment through

your joint witness statement I was -- this is perhaps more for me but I

was interested, at your paragraph 2.5(d) you made reference to Mercury

being fully compliant with its various conditions of consent. 5

MR GRALA: Yes.

MR MULLIGAN: I assume that that is because you see that as part of the ability to rely

on those consents. 10

MR GRALA: So that is something that myself and Ms Rickard, we just covered for

completeness and that is something that I sought clarification from

Mercury on.

15

MR MULLIGAN: So you'd be relying on Mercury as to that compliance issue?

MR GRALA: Absolutely, yes.

MR MULLIGAN: And I notice that Ms Rickard wasn't really in a position to -- 20

MR GRALA: I appreciate that as well, yes.

MR MULLIGAN: That is probably fair enough.

25

MR GRALA: Absolutely.

[11.10 am]

MR MULLIGAN: Just in terms of this ability to rely on consents or a consent, 30

Mr Crimmins for Council gave evidence or gave advice to Mercury at

the beginning of the year that if new generators were to be installed at

the site that it was likely that a variation to Mercury's consent would be

needed. Are you aware of that advice?

35

MR GRALA: Have you got a copy of it and I can have a look?

MR MULLIGAN: It's exhibit 27. Can we provide a copy of that?

MR GRALA: So, is it the top of this email? 40

MR MULLIGAN: Yes, second paragraph.

MR GRALA: I've read that.

45

MR MULLIGAN: Mr Crimmins also gave evidence on the stand that in his view Mercury

would be required to obtain new consents or a variation if it sought to

restart the power station with new equipment. Do you accept that

Page 6109


proposition?

MR GRALA: I'm aware that he said that. I remember reading that in the transcript

but I didn't accept it because I couldn't see why in all circumstances

they would have to do that. So if they were, for example, to replace the 5

turbines with exactly the same turbines that they had then I don't see

why the effects envelope effectively would need to be varied. I guess

one of the backgrounds for thinking of that is if you think the air

discharge consent that have goes until 2037 and I don't think it would

be reasonable to except that the turbines that they had in 2012 or 10

whenever it was when the consent was granted may last until 2037. So

I wouldn't expect that you would have to do a variation every time you

wanted to replace a turbine that may malfunction and you couldn't

repair. Provided effectively that the effects envelope of those new

turbines were within the consented envelope. 15

MR MULLIGAN: Because we want to get out of here in a reasonable amount of time, I

need you to listen to my questions. What I said was, new equipment

so I suppose what I'm interested in is you'd accept that at least it's a

possibility that it's not like for like but new equipment was put in place 20

that there could be --

MR GRALA: So if they wanted to install new turbines that were materially different

and the effects were different, then, yes, they would need a variation.

25

MR MULLIGAN: Are you aware that the air discharge consent has quite extensive review

provisions in it at the end of it which require or contemplate the

constant improvement of equipment. Are you aware of that?

MR GRALA: I think that was mentioned last week in the hearing from memory. 30

MR MULLIGAN: Just going back to exhibit 27, you'll see that Mr Affleck for Mercury in

reporting to Mr Crimmins, the penultimate paragraph of his email says

that if Mercury were to install new turbines the company would assess

different turbine technology. Do you see that? 35

MR GRALA: Yes.

MR MULLIGAN: So in those circumstances it's likely that there would have to be a

reassessment and potentially a variation, do you accept that? 40

[11.15 am]

MR GRALA: Yes. So you would assess it and then if you were outside that envelop

and you needed a variation then you would have to apply before putting 45

Page 6110


them in, agreed.

MR MULLIGAN: Were you here last week when Mr Graham was cross-examined?

MR GRALA: Yes. 5

MR MULLIGAN: Would you accept that he spent a very, very long time justifying the

reasons for monitoring?

MR GRALA: Yes. 10

MR MULLIGAN: Would you accept that the reason you'd need monitoring is if you were

to install new equipment so you could justify your variation. Do you

accept that?

15

MR GRALA: That would be one of the reason, it might be if you wanted to expand

or do something different, a variation would just be one of the things

that you would need the monitoring for. You get a new consent and do

the same thing.

20

MR MULLIGAN: When you talk about being able to restart this under the current consent,

it's not as simple as that, is it?

MR GRALA: No, you'd have to look at everything. You'd have to look at the

technology you install and do an assessment and compare the two. It's 25

a complex site so I don't anything is straightforward on that site.

MR MULLIGAN: Now, in that same email, if you can flick over the page, exhibit 27, Mr

Crimmins' email of 20 October to Mr Affleck, it's an email of three

paragraphs. The last paragraph talks about the potential for the air 30

discharge consents to expire if not exercised. Do you see that?

MR GRALA: I think it says cancel rather than expire, but it says that Council can

have the ability to cancel the resource consent by RIB notice if it's not

exercised for a five year period. But they have the ability to extend 35

that. So it is slightly different.

MR MULLIGAN: But would you accept that in terms of the integrity of the consents that

there is that risk that may undermine them?

40

MR GRALA: Yes, sure.

MR MULLIGAN: So you would accept that there is potential if the consents represent an

optionality, to the extent they might, that there may be a limit that is

less than 2037? 45

MR GRALA: Yes, so if they didn't exercise it, if Mercury didn't exercise it for five

years and Auckland Council made a call that they wanted to cancel it

Page 6111


for whatever reason and Mercury weren't able to get an extension, then,

yes, those would effectively be cancelled.

MR MULLIGAN: Just going back to your statement about the compliance with

conditions, you've indicated that you sought advice from Mercury to 5

allow you to make that statement?

MR GRALA: Correct.

MR MULLIGAN: Now, are you aware that when the site was originally consented the 10

land use consent required it to provide an easement over part of the site

for a walkway?

MR GRALA: Yes. Is that the one that originally went through the middle of the two

parcels? Is that correct? 15

MR MULLIGAN: The original walkway went to the north through what was then the car

park. Are you aware of that?

MR GRALA: Yes, I am aware of that. 20

MR MULLIGAN: And ultimately ended up to the south?

MR GRALA: Yes, so Mercury, five years ago or so, did a 127 to the land use consent

and I think there were two things, there was one that they wanted to 25

change the operation from a baseload plant to a peaking and then they

also realised that they -- or they moved the footpath or the easement

that was for a footpath to the south, adjoining that reserve land already.

[11.20 am] 30

MR MULLIGAN: Just going back to the … no, we will stick to where you have got to.

Have you reviewed their land use application, that 127 application?

MR GRALA: Yes. 35

MR MULLIGAN: I think that when I looked at it, part of the rationale for the movement

of that footpath, so Mercury moving its obligations from the north

Page 6112


down to the south, was for safety reasons, health and safety reasons?

MR GRALA: I'd have to have a look at it.

MR MULLIGAN: You've got that consent? 5

MR GRALA: Yes, I do.

MR MULLIGAN: That's the consent of 2012?

10

MR GRALA: It's the consent application from February 2012.

MR MULLIGAN: Just for the record I think those consents are part of exhibit B. Have

you got the consent there?

15

MR GRALA: The application, sorry, I'm just reading through it. So it talks about the

-- that's to preserve future options. Options for future development and

expansion and then sort of midway through page 11 it talks about how

the movement of the walkway is necessary to ensure that it's not a

significant impediment to any further expansion. It will create a 20

significant health and safety issue if there's expansion and development

proceeded on the northern site, where it was. Then it just talks about

other pedestrian, cyclist health and safety aspects of trying to take the

kink out in the third bullet point.

25

MR MULLIGAN: As part of that material that you've got and are reading from there, is

there a letter dated 12 July 2010 from Mighty River Power to Carol

Stewart at Auckland Council?

MR GRALA: No. 30

MR MULLIGAN: I will just hand you some material which is part of the consultation

record from that application. Have you got that? Do you confirm that

that letter appears to discuss the movement of the walkway and the

rationale for that? 35

MR GRALA: Yes. I think it's from 2012 so it foreshadows -- I guess it's part of

pre-application discussions with them about -- because it's

foreshadowing the move of it.

40

MR MULLIGAN: Yes. Now, in terms of the movement of the walkway, Mercury were

required through that consent to provide an easement in favour of

Council because parts of the footpath would be on Mercury's site. Is

Page 6113


that your understanding?

MR GRALA: Yes.

[11.25 am] 5

MR MULLIGAN: I think that there was a plan. Have you got that plan?

MR GRALA: I've got a plan. It's the LA4 planting plan that shows it. Is that the one?

10

MR MULLIGAN: Yes.

MR GRALA: Yes.

MR MULLIGAN: Perhaps if we can produce that as an exhibit and the previous document 15

as an exhibit as well.

MS DUFFY: The previous one was 30.

MR MULLIGAN: The previous one was 30. This one is 31. 20

DR PRIESTLEY: The land use consent, that one is 30, is that right?

MR MULLIGAN: Yes, 30 apparently, sir. With reference to that plan, you would agree

that the walkway or the parts of the easement that Mercury are 25

providing are down on the southern western and southern eastern

corners of the site? Is that correct?

MR GRALA: Yes, correct.

30

MR MULLIGAN: In the red hatched areas?

MR GRALA: Yes, that's the footpath easement area.

MR MULLIGAN: That's to provide for a complete link to a walkway along that southern 35

side, that's correct?

MR GRALA: I don't think it's there to complete the link because the link is already

complete, but I think it's to make it wider.

40

MR MULLIGAN: To I think in the material address the pinch points at either end?

MR GRALA: Yes. Yes, I think it must have been borne out of CPTED type

requirements of sight lines and stuff like that. So it's to make it wider

through those areas. 45

MR MULLIGAN: You would accept that given your knowledge of the evidence that's

been given so far in terms of risk that that proposal would have drawn

Page 6114


the public walkway closer to potential risk sites on the site? Would

you accept that?

MR GRALA: There would be the chance that they would do that. My understanding

is that a footpath wasn't to be extended into that area, so it was to 5

effectively make the corridor wider but the footpath was to stay in its

current location. In terms of the main route, people would still be

carrying on the footpath through the middle but if they jumped off the

footpath on to that, then yes, they would be closer than they would

otherwise be. 10

MR MULLIGAN: Ultimately, it was to provide for a pedestrian link that linked up with

the Greenways network, isn't it, across the bottom of the site and then

to go south when you hit the rail line?

15

MR GRALA: No, because there's a link there already, so it's to make the link wider

in those points. So, looking through the material on it, it was pretty

clear that it was only to be used as a verge.

MR PARSONSON: Is it to make the link more effective, to make it more easily utilised, to 20

be safer for use by pedestrians?

MR GRALA: I think so. I think it was to -- I wasn't part of it but just looking at it, I

think it's to improve sight lines, all the crime prevention through

environmental design type things to remove entrapment spaces and 25

stuff like that.

MR PARSONSON: So recognising that it will be a better route for people to walk along?

MR GRALA: Yes. 30

MR MULLIGAN: Doesn't the advocacy of that route by Mercury suggest that they were

comfortable that having the public near those risk centres was not a

problem?

35

MR GRALA: Yes, I think that at ground level they're saying -- it would infer that they

were comfortable with that, yes, absolutely, and certainly more

comfortable with where it was than -- where they had moved it to

compared to where it was.

40

MR MULLIGAN: Comfortable next to the pigging station?

MR GRALA: Well, to be fair, the walkway is already next to the pigging station, so

in terms of the red hatched areas, yes, it's I guess closer to the pigging

station. 45

MR MULLIGAN: Comfortable facilitating the walkway closer to turbine GE105 and its

Page 6115


so-called explosion risk?

MR GRALA: My understanding is that at ground level, yes, you would have to take

that approach or you'll have to take from that that they were

comfortable with that. 5

MR MULLIGAN: Not as far to fall when you get hit maybe?

[11.30 am]

10

MR GRALA: Less exposed, I don't know. I don't know. I don't know the answer.

MR MULLIGAN: But the idea was for Mercury, then Mighty River Power, to move the

walkway from the less risky northern side and suggest that the through

route go to the southern side? 15

MR GRALA: No, I think what the application material says is that at that stage they

had other plans to expand the power station and that would be to the

north, so if they had to have the footpath there the safer place would be

to the south. I don't think it's based on what was there at the time. I 20

think when you read it it's clear that it was all to, I guess, future proof

their intentions of the site.

MR MULLIGAN: Sort of similar to what happened with the alignment of the road through

the car park, really, isn't it? 25

MR GRALA: I don't ... I think they were different issues but they both changed -- they

might have both influenced it. I couldn't say for sure, sorry.

MR MULLIGAN: I suppose one difference is that at this time the station was operating, 30

wasn't it?

MR GRALA: Correct.

MR MULLIGAN: Whereas now it's not? 35

MR GRALA: Correct, and at that stage they also wanted to -- they had plans, in my

understanding imminent plans, that they wanted to expand it.

MR MULLIGAN: Now, going back to the footpath and to the covenants, are you aware 40

that those easements have never been granted or never been registered

on the title?

MR GRALA: Registered, yes. My understanding is that they haven't been registered

on the title because the consent mechanism effectively they 45

provided -- Mercury had provided a draft wording of the easement with

the application material, and the way it was granted said that once

Auckland Council effectively agreed with that wording they would

Page 6116


have six months to register it. But talking with Mercury, my

understanding is that Council have yet to enact that by approving the

wording. I'd have to take their word for that.

MR MULLIGAN: I'll get you to have a look at a letter dated 18 August 2015. 5

DR PRIESTLEY: Is this a letter or something else, Mr Mulligan?

MR MULLIGAN: It's a letter, sir, from Council. What this record from Council suggests,

and I'm referring specifically to the paragraph after (d) near the bottom 10

of the letter, is that Council were enquiring with Mercury about the

registration of the easement but that Mercury indicated at this time in

2015 that the site -- and I with some interest noted the word

"decommissioned", were decommissioning the site and, therefore,

didn't feel the need to pursue the registration of those easements. 15

MR GRALA: So what it's saying is that Council were taking a view here that they

should have registered that easement. It was different to my

understanding from what Mercury had told me and also how I had read

the consent, that view, but I guess what they're saying here is that 20

someone in 2015 from Mercury - or Mighty River Power as it was at

this stage - told them that the site was going to be decommissioned.

Then Council decided that based on that they weren't going to take any

enforcement action, but it's difficult to tell from just that bit of

correspondence, yes, what the scenario is but that's how it reads. 25

[11.35 am]

MR MULLIGAN: That advice from Mercury that's referred to about the site being

decommissioned, that's consistent with the evidence that you had a look 30

at this morning from Mr Colson that was given to the PAUP, isn't it,

too, that we've tried hard to make this thing make money but ultimately

we're going to pull it to bits?

MR GRALA: Yes, they're both from that kind of mid-2015 period. Yes, they are. 35

DR PRIESTLEY: What a bizarre letter. Mr Grala, do you know whether the pinch-points

which this expanded pathway is designed to cure -- did the expansion

take place?

40

MR GRALA: Sorry, could you just repeat that? I couldn't quite catch it.

DR PRIESTLEY: This pathway Mr Mulligan has been asking about was designed to

reduce pinch-points. Is that your understanding?

45

MR GRALA: Yes. Well, I think --

DR PRIESTLEY: Can't you hear me? You're looking bewildered.

Page 6117


MR GRALA: No, no, I'm thinking, sorry.

DR PRIESTLEY: I see.

5

MR GRALA: That's how I look when I think.

DR PRIESTLEY: You said it, not me.

MR GRALA: From my recollection there was kind of -- there was two reasons. The 10

primary reason was --

DR PRIESTLEY: I don't want a long exposition. This whole exercise was designed to

reduce pinch-points and Mercury said, "Yes, go ahead and we'll give

you this easement provided it's at your cost". 15

MR GRALA: Yes.

DR PRIESTLEY: That is what happened.

20

MR GRALA: Agree.

DR PRIESTLEY: Well, why hasn't Council registered the easement? It seems bizarre.

What has decommissioning the power plant got to do with the right of

way? 25

MR GRALA: I can't see how the decommissioning has anything to do with whether

the pathway should be widened but I think what --

DR PRIESTLEY: It just seems a lengthy letter written by a Council official trying to 30

justify not having done their job. Would you agree?

MR GRALA: I think what Mr Mulligan is saying is that it was Mercury, the onus was

on Mercury to register the easement.

35

DR PRIESTLEY: I don't think he was saying that at all. Anyway, off you go,

Mr Mulligan.

MR MULLIGAN: I am saying that, sir.

40

DR PRIESTLEY: You are, are you?

MR MULLIGAN: Yes, and what I put to Mr Grala is it doesn't appear, based on this

correspondence, that Mercury have done that but what they have said

is, "Hey, we're not using our consent" and therefore Council said, 45

"Well, we won't bother enforcing this obligation". You'd accept that is

what this letter says?

Page 6118


MR GRALA: That is the view that Council have taken, I think. I still think that you

would want to do that easement irrespective of whether you were using

the consent or not because it has obviously got some public benefit.

MR MULLIGAN: But that walkway is not formed at the moment, is it? 5

MR GRALA: No.

MR MULLIGAN: So providing for pinch-point protection is not relevant in terms of an

actual walkway that is operating, is it? 10

MR GRALA: No. It would be for the future walkway once they -- if they ever

established the walkway through that area.

MR MULLIGAN: So really what has happened here is that Mercury have asked for this 15

walkway to move so it can accommodate its development plans to the

north. It hasn't effected that consent but Council's let it away with it

for the time being because it is not using the consent.

MR GRALA: It is difficult to look at it in isolation but if that was the case then that 20

is what it reads like, yes.

DR PRIESTLEY: Mr Mulligan, who do you understand the consent holder to be in this?

MR MULLIGAN: Mercury. 25

DR PRIESTLEY: Are they the consent holder?

MR MULLIGAN: Yes.

30

DR PRIESTLEY: In which case you're right because that is what it says. I would have

thought the consent holder is the person benefiting from the easement.

MR MULLIGAN: No, sir. It is the --

35

DR PRIESTLEY: All right.

MR GRALA: When I spoke to --

DR PRIESTLEY: We don't need to add to this. Next question, Mr Mulligan. 40

MR MULLIGAN: You've already agreed with me that conditions of consent define that

envelope of effects. To this extent that consent is not complete; it is

not perfect; it is not perfected.

45

MR GRALA: I would say that it is not. If that is the case and they're not complying

with the conditions then they're not meeting their conditions of the

consent.

Page 6119


MR MULLIGAN: They're not lawfully established under that consent, are they?

MR GRALA: I don't know if the term is "lawfully established", because the consents

have been granted, but they're not currently complying with the 5

consents.

MR MULLIGAN: They're currently not operating their turbines, turbines 101 and 102, are

they?

10

MR GRALA: No.

MR MULLIGAN: Turning to your paragraph 204 of your evidence ... sorry, I've

misdirected you. We've already covered that.

15

[11.40 am]

Paragraph 21 and 22 of your summary. Here you address something I

put to Mr Phillis, which related to the lack of risk assessment in terms

of the 2004 consent application for GE105. 20

MR GRALA: Correct, yes.

MR MULLIGAN: I had put to him that one would have expected to have seen, given the

debate about whether there was an oil can that was going to catch fire, 25

some reference to the risks that are being raised now, turbines flying

all over the place, end caps exploding, if they were in fact true risks.

MR GRALA: That is my recollection, yes.

30

MR MULLIGAN: Again, through that consenting process where risk is being addressed,

you would expect that to occur in that 2004 assessment, wouldn't you?

MR GRALA: My point here is that if the actual -- if those things are associated with

the power station and the power station is permitted under the land use 35

consent, because it is a land use consent, then if it is permitted you

wouldn't have to do an assessment of it because it is contemplated by

the plan.

MR MULLIGAN: But how is it permitted? 40

MR GRALA: Because gas-fired power stations were provided for as a permitted

activity in the isthmus plan.

MR MULLIGAN: Why was an application filed in this case? 45

MR GRALA: Because it was for -- this was for the storage of hazardous substances

which requires consent under the isthmus plan but it was also for an

Page 6120


industrial trade activity consent for storm water discharge under the air,

land and water plan. So it is more for the holding of hazardous

substances rather than being for the actual power station itself.

MR MULLIGAN: What were the hazardous substances? 5

MR GRALA: That was the storage of, I think it was, diesel oil. It was different to the

actual risk associated with the turbines.

MR MULLIGAN: In terms of diesel, though, it talks about diesel tanks but those were 10

never installed. I didn't see those on site.

MR GRALA: I'm not sure but I think what you're trying to say is that those are

all -- that is the storage of hazardous goods and they trigger consents

under both the district plan and also the air, land and water plan that 15

applied at the time. That is all about making sure that you have good

practices to maintain those substances so that it doesn't leach out on to

the footpath and get washed out in the storm water system. So it is a

discharge consent and land use consent but the actual power station

itself was permitted. 20

MR MULLIGAN: If it ran on gas?

MR GRALA: Yes, it does run on gas.

25

MR MULLIGAN: And 101 and 102 run on gas, too?

MR GRALA: Yes, all three of them do.

MR MULLIGAN: In terms of your planning assessment - and I don't want to cover this 30

extensively unless I need to - I would assume that you would accept

that your planning assessment, while it concentrates on the Mercury

site and the implications of the East West Link in relation to that, it is

not a general planning assessment of the project overall. Do you accept

that? 35

MR GRALA: Agree.

MR MULLIGAN: And you would accept for a project like this, a linear project, the

decision-maker, and therefore the applicant, needs to undertake a 40

planning assessment at that global level. Do you accept that?

MR GRALA: Agree, overall, yes.

MR MULLIGAN: In terms of the statutory requirements, section 104D, part 2, that it is 45

that global assessment and those tools need to be brought to bear in

terms of all of the effects, beneficial and negative. Is that correct?

Page 6121


MR GRALA: It is the balancing that you're talking about, putting everything in the

round.

MR MULLIGAN: But that is not an assessment you've undertaken?

5

MR GRALA: No.

DR PRIESTLEY: Mr Mulligan, I'm just conscious of the time.

MR MULLIGAN: Yes, sir. 10

DR PRIESTLEY: One of the matters which will definitely perplex the Board, if you're

going to cross-examine on it, was the nature of conditions which the

two parties oppose, and the devil is in that detail really.

15

[11.45 am]

MR MULLIGAN: It is, sir, and I do want to get on to that but I briefly wanted to touch on

the issue of reverse sensitivity. You've made much of the concept of

reverse sensitivity and counsel has made much of a thing about reverse 20

sensitivity. Do you accept that in the normal course of things that the

concept of reverse sensitivity is just a particular type of an effect on a

proposal or a site? Do you accept that?

MR GRALA: Yes. I guess it's a type of consent, yes, absolutely. A type of effect, 25

sorry.

MR MULLIGAN: That effect is where a sensitive land use starts to come in close

proximity to one which is a bit messy, noisy, loud, whatever, and as a

result of that, while they initially accepted it, the inhabitants of the 30

sensitive site start to complain about some of these effects and start to

limit what can occur on the pre-existing site. Do you accept that is the

classic formulation of reverse sensitivity?

MR GRALA: As a general principle, yes, that is the most common, I would say. 35

MR MULLIGAN: Would you accept that it wouldn't be usual to consider a road and

people who in a transitory fashion go along a road as being equivalent

to residential land users?

40

MR GRALA: Yes, I would accept that as a general principle but I would also say that

this scenario isn't a general everyday occurrence either.

MR MULLIGAN: But would you accept that reverse sensitivity can only really occur if

people on the site, ie the East West Link, start complaining about the 45

Mercury site and start limiting its operations as a result of those

complaints?

Page 6122


MR GRALA: I don't think in this situation it is just that because I think it's also --

because the reverse sensitivity effect that I've raised here comes to bear

out of a health and safety effect and so Mercury are having to change

its operation as a result of their health and safety obligations by the

proposal introducing all these people, cyclists, drivers. 5

MR MULLIGAN: Can't that just be described as an effect on their operations rather than

a reserved sensitivity effect?

MR GRALA: I think health and safety effects is a type of effect and that's both from 10

the proposal going on to the power station as we have heard and also

the other way around. But I think this is really Mercury having to

change their operation as a result of having to meet their health and

safety obligations. I think at the June facilitated meeting Mr Flexman

gave a really good reason about why the power station is there. It is in 15

a heavy industrial zone, end of a cul-de-sac, away from effectively any

sensitive uses, away from people, and that won't be the case as a result

of the proposal. So it's how Mercury will have to change the way they

do things as a result of the proposal being there.

20

MR MULLIGAN: It could just be described more broadly as an effect.

MR GRALA: It's a part of an effect, absolutely.

MR MULLIGAN: In your paragraph 70(a) of your evidence-in-chief you refer to reverse 25

sensitivity effects on the solar panels?

MR GRALA: Yes, so that was in relation to dust, I think. There was two things. The

reverse sensitivity was about dust but that was only one consideration

in terms of the NPS. 30

MR MULLIGAN: So what the landowners next door might start complaining that dust

might be getting on the panels? How is that reverse sensitivity?

[11.50 pm] 35

MR GRALA: Yes, you're right. That's probably more just an operational effect of the

proposal in terms of that.

MR MULLIGAN: It doesn't make sense as a reverse sensitivity? 40

MR GRALA: No, that one probably doesn't, no.

MR MULLIGAN: Just in terms of noise, dust, traffic, you would accept that noise and

Page 6123


vibration with the co-location could be addressed through conditions.

MR GRALA: Those two could, yes.

MR MULLIGAN: Similarly I think Mr Carlisle made reference to the excess in traffic 5

issues being able to be dealt with by conditions? You'd accept that?

MR GRALA: Yes, I do.

MR MULLIGAN: Mr Graham accepted that the issue of dust could be dealt through the 10

conditions proposed.

MR GRALA: Yes.

MR MULLIGAN: Now, there's been some talk about the possibility of batteries on site as 15

future development. It's not something that is really a likely outcome,

is it?

MR GRALA: I'm not that familiar with this. I would have to talk to the Mercury guys

about it but I understand there are batteries on the site. I think Mr 20

Flexman might have even talked about it when he was here.

MR MULLIGAN: Okay, if you're not familiar with it then I won't comment on it. Now,

we'll turn to the issue of conditions. Just for the nature of this

discussion, you were here when Ms Hopkins gave her evidence and she 25

had provided a table, which I think I can find. Do you have that?

MR GRALA: I've got it here somewhere.

MR MULLIGAN: It's got some notes on it so hopefully that indicates that you've been 30

using it. I just want to discuss, first of all, the rules of engagement and

want to get you to confirm if we can use this as a good way of

comparing your conditions with hers. Is that a fair enough way to do

it?

35

MR GRALA: Yes, yes.

MR MULLIGAN: For the benefit of Board Member Parsonson, this was a table that was

prepared by Ms Hopkins last week and just puts one against the other,

so it might be helpful in terms of that. Before we turn to these 40

conditions I wanted to refer you to your paragraph 112, 113 of your

evidence-in-chief.

MR GRALA: 112 was it, sorry?

45

MR MULLIGAN: Yes, 112 and 113, and in particular the last sentence in 112 and first in

113. You agree or state there that the objectives of conditions are that

they should contain clear statements of outcomes, clear descriptions of

Page 6124


outcomes and the processes that need to be followed to get to those?

MR GRALA: Yes, that's what it says and I agree with that still.

MR MULLIGAN: So that's your general framework for what a condition should look like? 5

MR GRALA: That's what I generally trying and achieve, yes, when I'm drafting them.

MR MULLIGAN: Now, just turning to the various conditions using Ms Hopkins' table.

In particular I refer to - and your conditions are in the second column - 10

your SD4, design and risk measurement and her equivalent SD2(a).

[11.55 pm]

You would accept that of your conditions that this is the only one that 15

refers to risk?

MR GRALA: Yes.

MR MULLIGAN: And that it's a relatively short condition which doesn't outline in huge 20

detail how risk might be addressed or assessed?

MR GRALA: Correct, and for that I had a discussion with Mr Phillis and just talked

about whether it's better to have the conditions be very specific on the

risk process or whether you are better off to focus on just the general 25

parameters and let the experts do that in behind it.

MR MULLIGAN: So Mr Phillis' advice was to just have general parameters rather than

be too specific.

30

MR GRALA: From my recollection, yes.

MR MULLIGAN: So you followed that formulation?

MR GRALA: More or less, yes. 35

MR MULLIGAN: But I assume implicit within that, and perhaps the most implicit

element, is that you have some parameters for measuring risk, is that --

MR GRALA: Yes, I think with any risk assessment you would need to do that. But 40

they don't necessarily have to be in the conditions to do that.

MR MULLIGAN: Now, you have two parts to that condition SD4, the first SD4(a)

requires the Agency to identify measures to address risk and the

measures have to do two things, is that correct? First of all they have 45

to achieve residential levels of risk or safety when dealing with

Page 6125


cohabitation that is acceptable to Mercury? That is a requirement?

MR GRALA: Among others, so it is acceptable to Mercury, NZ Transport Agency

and, I think, the other parties who have infrastructure on the site. That

came about after 30 June facilitated meeting when all the parties agreed 5

that it need to be collaborative and they all needed to be involved.

MR MULLIGAN: In answer to questions to Mr Parsonson today, you would accept that

in terms of that journey with KiwiRail, Transpower, First Gas that NZ

Transport Agency could have some confidence that they would agree 10

that acceptable risk levels could be reached?

MR GRALA: On what basis, sorry?

MR MULLIGAN: That's fine, I probably am asking you to talk on behalf of -- 15

MR GRALA: Yes.

MR MULLIGAN: But in terms of Mercury, you would accept that the standard you

provide doesn't provide any objective level for risk assessment, it just 20

simply says Mercury has to be satisfied.

MR GRALA: Yes, it is referencing their health and safety policies.

MR MULLIGAN: Let's get to that but in terms of Mercury being satisfied, there's no 25

independent standard to which they have to be satisfied specified in (a),

is there?

MR GRALA: Not in (a), it comes later on.

30

MR MULLIGAN: No process is dictated as to how one reaches that view on residual risk,

is there?

MR GRALA: No, no.

35

MR MULLIGAN: There's no process for how Mercury reaches that view, is there?

MR GRALA: No.

MR MULLIGAN: And we don't know what level of risk from that condition might be 40

Page 6126


acceptable to Mercury, do we?

MR GRALA: No. It is based on their view and the qualified expert again.

MR MULLIGAN: It doesn't say that, though, does it? 5

MR GRALA: No, I guess it's inferred.

MR MULLIGAN: It's what?

10

MR GRALA: Inferred that Mercury have to be happy with it.

[12.00 pm]

MR MULLIGAN: It states that Mercury have to be happy with it but you indicated that in 15

your -- well, I think you indicated that in your view their happiness

should be dictated by an independent expert.

MR GRALA: No, that's not what I was saying. What I was saying is at the end part

of that condition it says that there also has to be confirmation from a 20

suitably qualified person that the measures required to achieve (a) and

(b) are appropriate. So, there is that kind of independence. It's not just

at Mercury's whim, I guess.

MR MULLIGAN: But there's nothing in there -- if Mercury adopted an unreasonably 25

stringent view of what an acceptable risk is, there's nothing that

would -- no objective standard to measure that against, is there?

MR GRALA: No.

30

MR MULLIGAN: It just comes down to their discretion, doesn't it?

MR GRALA: And the suitably qualified person I guess vouching that it's appropriate.

DR PRIESTLEY: Just pausing there, Mr Grala, as an experienced planner, would you 35

agree with me that your SD4 is really just kicking the can down the

road? We know for whatever reason that at some stage in this process

Mercury and NZ Transport Agency have been unable to get to a

solution. Identifying risks and hazards has not been completed. The

initial co-operation or discussions which Mr Mulligan was asking you 40

questions about in 2015 and 2016 have been overtaken by, on

Mercury's stance for whatever reason, a stance of opposition to this

project. Now, your condition 4(d) gives no certainty to anyone that

Mercury's stance of opposition is going to change. They don't have to

Page 6127


agree to anything, do they?

MR GRALA: No, you're right, sir.

DR PRIESTLEY: I put it to you, you being a planner, that from a planning point of view 5

that condition is useless. It's not going to achieve anything.

MR GRALA: No, it can't bind -- in my view, it can't bind Mercury, sir, so these

conditions are -- I've tried to be helpful to the Board and --

10

DR PRIESTLEY: Yes, I know, but you agree with me it's useless?

MR GRALA: I agree, absolutely. Well, they --

DR PRIESTLEY: It's not going to get us anywhere? 15

MR GRALA: It depends on --

DR PRIESTLEY: Unless Mercury suddenly has a change of heart?

20

MR GRALA: Yes, agree, and everyone agrees.

DR PRIESTLEY: All right. Then when you look at the Hopkins condition, which is in

the left-hand column, condition SD2(a), that at least - and this is behind

Mr Mulligan's question - is giving you somebody who's qualified who 25

can resolve matters, but I guess Mercury's opposition to that will be,

"We might not necessarily agree with this resolution process and we

might not like the outcome". Do you agree?

MR GRALA: Yes, agree. 30

DR PRIESTLEY: So, really, Mercury wants to hold the joker?

MR GRALA: Well, I think from my understanding talking to Mercury, sir, it's that

they want to make sure that whatever measures are brought on the site 35

that they can still retain a site that they can operate and that's workable.

DR PRIESTLEY: Yes.

MR GRALA: That's the extent that they want to be involved. 40

DR PRIESTLEY: So if Mercury's underlings - that's not quite the word - the people who

are not quite at the apex of their structure, people underneath

Mr Whineray, are told that we want to keep this site intact with nothing

intruding over it at all, that's curtains, isn't it? It's just not going to 45

Page 6128


work?

MR GRALA: That's a potential scenario, yes.

DR PRIESTLEY: Right. Next question, Mr Mulligan. 5

MR MULLIGAN: I took from your answers to my questions that you thought that the

reference to a suitably qualified person and their intervention would be

helpfully deployed not only if conditions were recommended and for

them to essentially peer review those to determine whether they were 10

safe enough, but should also be deployed to determine whether

Mercury were just being obstructive. Do you think that that would be

an appropriate use of the qualified person as a circuit breaker?

MR GRALA: That wasn't my intention by talking about that. That was purely from 15

a health and safety perspective, I guess. Talking to Mr Phillis, he was

saying that it's useful to have -- if the parties went away and agreed on

a whole lot of measures, it's useful. You need someone who is suitably

qualified to vouch that they're going to be effective, those measures are

going to be effective. It's not supposed to be a disputes resolution type 20

condition that Ms Hopkins has proposed.

MR MULLIGAN: If ultimately, as the Chairman has indicated to you, Mercury not for

safety reasons but for other reasons just decided we can't be bothered

dealing with the complications of having a road and the restrictions that 25

it might place, that they could just say no?

[12.05 pm]

MR GRALA: Yes. I think that's the limitation with the conditions. They don't bind 30

Mercury to do anything on it.

MR MULLIGAN: So they're not actually conditions which relate to safety, though, are

they, because they're not linked to any safety standard, any objective

measure relating to safety? They are just at Mercury's discretion? 35

MR GRALA: I guess it's their discretion in terms of their policy, so to that extent yes.

MR MULLIGAN: What policy? Mr Whineray's policy?

40

MR GRALA: Whatever health and safety policy they have. Every corporate has a

different one.

MR MULLIGAN: What's that?

45

MR GRALA: I don't know off the top of my head, sorry.

MR MULLIGAN: In terms of the average corporate's policy, you would accept that that's

Page 6129


just written by them and that there's no great certainty to that, that could

change every day? You would accept that?

MR GRALA: Yes, they can review it whenever they want, I think. I don't think

there's anything in the legislation. I'd have to talk to Mr Phillis about 5

that.

MR MULLIGAN: So, again, it doesn't really provide a sound foundation for an objective

assessment of risk, does it?

10

MR GRALA: You probably wouldn't run the whole thing off it, you're right, but it's

a relevant consideration.

MR MULLIGAN: Wouldn't you not run any of it on it? Wouldn't you actually rely on

some established standards like the New South Wales standard or the 15

Victoria standard that Mr Phillis seemed happy with?

MR GRALA: Yes, I would have to defer to Mr Phillis on that. If he thinks that those

standards are going to -- if you meet those that you also will meet the

health and safety obligations under the legislation, then that would be 20

appropriate.

MR MULLIGAN: Just talking in general planning terms and the construction of a

condition, you've got two landowners that are having to assess the

nature of and viability of their interaction. You've got an objective 25

standard sitting over here that you could use to govern that interaction.

Wouldn't you use that in every case and not just rely on the discretion

of one party or the other?

MR GRALA: I think, yes, that would be a good general approach to take. If there 30

was one where all the relevant experts agreed to take that, then the

condition could specify that. Talking to Mr Phillis, he was of the view

that there is an extent to how much you want to actually describe all of

that in the conditions, but I don't have a problem from a planning point

of view referencing an objective standard. 35

MR MULLIGAN: It's not so much a problem from a planning perspective, it's actually the

right planning approach, isn't it?

MR GRALA: If it will give more certainty to the outcome, then yes. 40

MR MULLIGAN: In terms of your condition SD4 as opposed to Ms Hopkins' SD2(a), and

while there may be some aspects you're not happy with, surely her

condition by providing reference to that objective standard is closer to

that planning ideal than yours, which relies on Mercury's discretion? 45

MR GRALA: Yes, I don't have a problem with that approach. I guess I've taken

guidance from Mr Phillis in terms of how much you should define that

Page 6130


and the fact that Mercury should have input into it and they should be

able to agree to the measures that come out. But as a general approach

I don't have a problem with that.

MR MULLIGAN: But you were here when Mr Phillis gave evidence, weren't you, and he 5

agreed with me that having a regime which started with the risk

assessment that Mr Erskine had prepared was an appropriate start and

that that should be used in an orderly fashion as an objective standard

to build upon. He accepted that. Would you take his advice on that?

10

MR GRALA: If that was the position he took. It was quite hard to follow that, but if

he took that approach and if he accepted that, then I would agree with

him.

MR MULLIGAN: Going back to your view about the way that a good condition should 15

be written, again having this reference to an objective standard, in this

case either the Victorian standard or, if necessary, the New South

Wales standard, and building upon some evaluation under that

standard, that would be an appropriate approach. It's an orderly

approach, isn't it? 20

[12.10 pm]

MR GRALA: I agree. I'm agreeing with you.

25

MR PARSONSON: Mr Mulligan, I've got a few questions and they're probably overlapping

quite a lot with some that you still have, which is fine and I'm certainly

not pulling rank, but as one of the decision-makers I'd quite like to

make sure we get ours out.

30

MR MULLIGAN: No, I think it would be helpful because I'm just quickly reviewing

where I'm at.

MR PARSONSON: Okay, thank you. Thanks, Mr Grala. Just working through conditions,

and Mr Mulligan has raised one of the queries I had around certainty 35

of implementation of conditions, one of the questions I have, and I'd

quite like to look in a little bit more detail at Ms Hopkins' ones, but just

looking at your summary statement, in paragraph 10 you've identified

what conditions would need to achieve, (a) through (e), and in 11

you've said if the Board confirm the designations and granted consents, 40

the proposed Southdown conditions in your appendix 1 would achieve

those requirements. That's your position, is it?

MR GRALA: Yes, that was my position at the time of writing it. I guess I've agreed

with Mr Mulligan that it would probably be helpful to include that 45

standard if that's what Mr Phillis had reached last week. I must admit

I struggle to follow that a little bit, but I think there were limitations on

what Mr Phillis was saying. He was saying that the measure that

Page 6131


was -- I think there was some model name for the risk assessment, but

there were also other ones that you could also use.

MR PARSONSON: Yes, I understand. So, at a minimum, if it achieved (a) through (e) is it

your view that then the conditions would achieve the -- as long as the 5

conditions achieved those requirements, and you consider your ones

do, but your ones perhaps could be strengthened if experts could agree

on a performance standard?

MR GRALA: Yes, I'd agree if they could flesh out what parts they needed to do the 10

assessment. One of the things that Mr Phillis was talking about is that

you don't necessarily want to lose flexibility and nimbleness in your

approach through prescribing it, so the balance will be how much you

specify.

15

MR PARSONSON: I understand what he said. I agree with you. A condition has more

certainty and particularly one that requires further work. If you've got

performance targets it's better. I understand what you're telling me

about Mr Phillis' advice.

20

If, then, a set of conditions achieved those outcomes you've listed in (a)

through (e) such as you suggest your ones do, albeit with your proviso,

then if they're implemented and an agreed expert came up with an

agreed assessment and agreed controls - this is all in assumption of

agreement - then would it be appropriate for approvals to be granted on 25

that basis, that the project would only go ahead if there was agreed risk

level and agreed controls?

MR GRALA: In terms of like the augier condition or the precedent --

30

MR PARSONSON: Yes, because there's two elements to that. One is the augier principle

that it would have to be offered by the applicant knowing that there

might be some veto process involved, and (b) there is some gaps in the

risk analysis at the moment and nobody is arguing there isn't, but there's

been a starting point by Mr Erskine's assessment, which Mr Phillis 35

certainly didn't kick for touch. He said it was a good start but it needs

work.

MR GRALA: Needs more work, yes.

40

MR PARSONSON: So the fleshing out of that detail and confirmation of appropriateness

would be through an agreed expert through conditions. Would that be

Page 6132


an acceptable approach if the parties had agreed through that condition?

MR GRALA: In terms of risk, then yes, I agree.

MR PARSONSON: Yes, in terms of risk that would be acceptable? 5

MR GRALA: Yes.

MR PARSONSON: Okay.

10

MR GRALA: I think as long as it had that operational aspect and it gave some

certainty that you'll still get a power station at the end that you can use,

then I'd agree with that.

MR PARSONSON: Yes, all that assumed, that the power station could restart and operate, 15

have the clearances to get cranes and things around and bits and pieces.

MR GRALA: Yes.

[12.15 pm] 20

MR PARSONSON: I just want to then ask one or two more questions. Just on that

paragraph ... no, it's not paragraph 10. Just bear with me, I'm sorry, I've

just got to find my question. Somewhere, and I'm sorry I can't put my

finger on it, you said -- 25

MR GRALA: I might be able to help you if you tell me what you're --

MR PARSONSON: There's a condition that says -- maybe I'll look at your conditions.

That's what I'm not doing, sorry. Yes, so in your set of conditions, 30

which is condition SD3, SD3 says:

"In achieving the outcomes of SD2, the requiring authority shall ensure

... that the project does not require the relocation of any of the following

assets away from the Southdown site" 35

and one is the Southdown rail supply substation. Why is it important

to retain that on site?

MR GRALA: I've I guess taken advice from Mercury on what the value is on that, 40

but my understanding is that they don't need it for the power station but

what they've told me is that they think that the substation works well

with the Transpower substation. They're kind of linked and if one was

to move, if they were to move that, then it's more likely that you would

lose the benefits of that Transpower substation and the flow-on would 45

be that that would then move offsite.

MR PARSONSON: Okay, so it could be a catalyst to lose the immediate location

Page 6133


advantage?

MR GRALA: It's a catalyst, yes, but it's not needed. My understanding is it's not

needed for the power station operation.

5

MR PARSONSON: Okay, thank you. Then on (c), which is over the page, (c) of that same

condition, the gas supply infrastructure, what's the distinction between

retaining the gas supply infrastructure on site versus ensuring there is

access to the gas?

10

MR GRALA: I guess priority 1 is keep it there and, if that's not possible, then

priority 2 is the bare minimum is a connection. But my understanding

is that just taking an approach of trying to maintain what Mercury have

at the moment, that's the reason for that. It's the connection that they

need for the power station, but beyond that I'm not sure if there's any 15

other reasons why the actual pigging station, for example, has to be on

that site. I think Mercury see the value of having it there, but I don't

know if it's crucial for the function of the power station. I would have

to take advice from Mercury on that.

20

MR PARSONSON: Accepted. Now, the Chair and Mr Mulligan have also raised the veto

element for Mercury of your recommended conditions, but I wonder if

I could just have a look at Ms Hopkins' version as well just for clarity.

Just starting at SD1, I think, just to couch my questions, this is the most

recent version of Ms Hopkins which we received dated 29 August. So, 25

SD1 provides for - and I don't want to get into too much detail - the

ongoing operation. SD2 sets the scene in terms of the risk assessment

and then SD2(b) fleshes out the engagement process and agreement

process. Then SD2(d) provides a dispute resolution process for

agreeing on an expert. But it does strike me, then, that SD2(c) says: 30

"Unless otherwise agreed between the requiring authority and Mercury,

construction of the East West Link viaduct shall not commence until:

(a) [any unacceptable risk that's not addressed]; and (b) until the

requiring authority has provided Mercury's written confirmation 35

required in SD2(d)."

So, even though there is a process whereby NZ Transport Agency could

possibly box on with a risk assessment through a dispute resolution

process, they've still got to loop back to 2(b) and get a written approval 40

from Mercury. So, is there still not a veto process between 2(b) and

2(c)?

[12.20 pm]

45

MR GRALA: I guess there's two parts. In that context, I didn't see why the word

"consult" had to be in there instead of "agreement". To me, it's easier

just to get everybody to agree to get the operational. The second thing

Page 6134


is that I think the written approval -- my understanding of the written

approval was to talk about the parts that were going to be implemented

outside the designation extent. So, I don't think it's just a written

approval for everything. It's just because NZ Transport Agency have

to get agreement from Mercury to do stuff outside the footprint because 5

they can't do that as part of this project.

So, I think if you made it carte blanche Mercury has to agree to

everything, which is what I'd tried to do through my conditions, then I

think you lose a lot of that ambiguity. You just agree from the outset 10

that the control measures have to be appropriate from a risk mitigation

perspective and that they have to result in a workable power station

site. The people who are best placed to comment on that are the

operational workable part of Mercury and I don't think there's any way

to avoid that. It's what Mr Phillis has told me. 15

MR PARSONSON: All right. That's all for now. Thank you.

DR PRIESTLEY: I'm sorry, Mr Mulligan, just one. Can you go back to your SD3 again?

Let's assume that on the Hopkins condition with the touchstone, if you 20

like, of New South Wales or Victorian guidelines built in to inform the

independent expert, let's assume that it was said risk could be managed

provided that the gas pigging station was taken off the site, and we have

had some evidence to that effect. Why should Mercury be able to insist

in that situation on it remaining on the site, which is what your SD3 25

says?

MR GRALA: Yes, that's a good question. I think the starting point is whether the

project should manage its own effects or whether it should rely on

Mercury to accommodate those. If Mercury sees benefit in the asset 30

being there, then it shouldn't be up to them to accommodate the

proposal. The proposal should be able to manage its own effects.

Myself and Ms Hopkins talked about this a bit and I spoke to Mr Horne

about it as well when drafting that. If those third parties want to leave

of their own volition, then this condition doesn't stop them, but what 35

it's saying is that from a starting point it shouldn't be the project that

pushes them off. If they have other reasons, then that's fine.

DR PRIESTLEY: I understand the distinction. That's helpful. Thank you. Yes,

Mr Mulligan. 40

MR MULLIGAN: In terms of your understanding of the proposal, though, Mercury has

no benefit and doesn't need what we describe as the KiwiRail

substation to operate its consented power station, does it?

45

MR GRALA: Agree, yes.

MR MULLIGAN: What it does need is some gas piped into the site so it can run its

Page 6135


turbines should it ever wish to do so, is that right?

MR GRALA: As a bare minimum, yes.

MR MULLIGAN: Now, just in conclusion, the site is not operating at the moment, 5

however we want to describe it, care and maintenance, closed down,

decommissioned. It is not operating at the moment, is it?

MR GRALA: Correct.

10

MR MULLIGAN: So what this is all about is the possibility that that may occur in the

future, isn't it?

MR GRALA: Yes. I mean, it's all about maintaining what Mercury have at the

moment, which is the ability to operate its site in a manner that they 15

can respond to anything they need to.

MR MULLIGAN: May be able to.

MR GRALA: Yes. 20

MR MULLIGAN: In terms of effects, it is an effect on a possibility, isn't it, in a broad

sense? That is what the East West Link is, an effect on a possibility.

MR GRALA: Yes. I think that is one way you could say it because, yes, it's an effect 25

on their ability to operate the site or the possibility to operate in the

future. Yes, I'd agree with that.

MR MULLIGAN: The conditions that are being proposed, we'll say Ms Hopkins because

I'm acting for NZ Transport Agency, the intention of those, whether 30

you agree that they've delivered that, is to keep that door open, to keep

that option open in some shape or form. Would you agree with that?

[12.25 pm]

35

MR GRALA: I think talking to Ms Hopkins that is certainly the intent but I don't

know if they're written in that way.

MR MULLIGAN: You agree that that is the purpose and that is the function. You just

aren't perhaps happy that the door is as open as Mercury would want. 40

Is that a fair assessment?

MR GRALA: I don't know if it is an open door but I don't think it is as clear as it

should be that as a result of all of these things they should be left with

a power station that they can operate within three to four months with 45

a certain normal generation, plus they have a solar research and

development centre that they can operate, continue to do what they

want, and they can move around the site, do the things that they can at

Page 6136


the moment, without being hindered by the project.

MR MULLIGAN: Yes, but that is what designations do when they go through or touch on

a site. They restrict use, don't they?

5

MR GRALA: Yes, but that is the problem though, isn't it?

MR MULLIGAN: This condition, to the extent that it does - and I understand that you

have some views as to if it does - tries to maintain some of that

optionality on the site, maybe not consent. It is endeavouring to 10

mitigate the effect on the opportunity, isn't it?

MR GRALA: I think that is the intent of it, yes.

MR MULLIGAN: To a degree, but perhaps not to the degree you want, it does mitigate 15

the effect. It keeps the option open in some shape or form, doesn't it?

MR GRALA: To some extent, yes.

MR MULLIGAN: So don't we have a situation where the designation does mitigate the 20

effects on Mercury in some shape or form? Would you accept that?

MR GRALA: To some shape or form, yes.

MR MULLIGAN: No further questions. 25

DR PRIESTLEY: Thank you, Mr Mulligan. Any more Board questions? Re-examine,

please, Ms Devine. I think you can assume, as you will have worked

out from the Board's questions, with the exception of consent holder

we are on top of it all. It was helpful to be able to read Mr Grala's 30

evidence in advance, so against that background your re-examination

mightn't be all that necessary to buttress what he has already said in

chief.

MS DEVINE: I appreciate that. Thank you, sir. 35

DR PRIESTLEY: Off you go.

MS DEVINE: Mr Grala, to what extent does the zoning for the Southdown site

provide for electricity activities? 40

MR GRALA: It provides for the solar research and development centre as one

activity, so it fully contemplates that. It contemplates for the battery

storage that Mr Flexman talked about last week. I guess in terms of the

general heavy industrial, zoning doesn't provide for it, but I guess if 45

you were to look at where a power station should go it's a reasonable

spot to choose one, which is reflected in the status that the isthmus plan

provided the site.

Page 6137


MS DEVINE: You mentioned batteries there. How does the plan provide for

batteries?

MR GRALA: Just give me one minute, I'll get the rule. So, the unitary plan provides 5

for it two ways. In the infrastructure chapter there is an activity table

and it is broken down into subsections, various parts of the

infrastructure. The top headline for electricity generation includes its

storage, so batteries are included that way, but then there is also a

specific line item which is A64, which provides for electricity storage 10

that is not a minor activity as activity on the site.

MS DEVINE: To turn to Mr Mulligan's questions regarding the assessment of

alternatives, he asked you a number of questions about the adequacy of

the assessment that NZ Transport Agency purported to take and I don't 15

need you to repeat your answers that you've already given. But to what

extent do you see in the documentation consideration of the

significance of the power station?

[12.30 pm] 20

MR GRALA: So it's not -- from what I could tell there wasn't any specific MCA

criteria, for example, so the MCA criteria for lifeline utilities, however

you want to define it, they all -- it is in the constructability section, so

it all assumes that it is going to be relocated rather than retained and 25

cohabited as in the case of the Southdown site. I guess when you look

at it in a general sense it assumes that the project is going to go ahead

and it is just a case of moving things around, so your waste water lines,

storm water lines, telecommunications, all that sort of stuff. There is

no -- what I noticed reading through it, there is nothing tailored -- I 30

guess tailored to the significance of the site in those criteria. There is

no sort of one box that would be captured by that. That would be --

there is no one MCA criteria that would be 100% relevant to the

Southdown site.

35

MS DEVINE: In terms of the approach that NZ Transport Agency has taken in terms

of its considerations and your comments to Mr Mulligan regarding

reconciling the approaches taken, to what extent do you consider that

NZ Transport Agency should have taken into account planning matters

like the resource consent and the zone and the significance of the site? 40

MR GRALA: I think I -- the resource consents to start off with, that is the kind of

cornerstone of planning and trying to provide for those as a bare

minimum. I think there has been a lot of discussion about is it

appropriate to do site-specific assessments for this project, given it is 45

so big and covers so many properties, but it is not a run-of-the-mill

industrial site. It is a site with a thermal power station on and a solar

research development centre and it is significant. So I would have

Page 6138


thought that whilst you wouldn't do assessments of every one of the

industrial sites it might go through but I think you would certainly try

and give specific attention in regard to the Southdown site because it is

not atypical. It's not typical, sorry.

5

MS DEVINE: In terms of the assessment, you referred to in your answers to

Mr Mulligan the correspondence between the parties, once the

alignment was selected, about the impact on the site and you'll

appreciate from the correspondence that resource consents are referred

to and you've answered that that is an important matter. To what extent 10

do you consider that the NZ Transport Agency adequately considered

the consents and their operability, Mercury's operability as part of those

considerations in that communication?

MR GRALA: I saw in the correspondence that Mercury talked about it but I didn't -- 15

I guess I didn't see anything that specifically responded to that in the

applications in terms of providing for that. There were some aspects

in terms of access for firefighting or whatever, but that is only one part

of the thing, the full range of matters that you would need to cover in

order to ensure that those consents were retained. 20

MS DEVINE: In answers to Mr Mulligan's questions about needing experts on your

team if you're the applicant to assess the effects on a particular site,

significant site, to what extent -- what sort of experts might you think

you would put on your applicant team if you were considering the 25

effects on a strategically significant site with a gas-fired power station?

[12.35 pm]

MR GRALA: Probably start with someone who has got knowledge of the electricity 30

industry. You would have an economist, traffic, risk, planner

obviously.

MS DEVINE: Are you aware when NZ Transport Agency finally got someone to look

at the issues of risk in terms of this process? 35

MR GRALA: I think it was after the June facilitated meeting at Southdown. I'm not

sure of the exact date.

MS DEVINE: In terms of your experience of preparing an application and assessing 40

the adequacy of alternatives, to what extent is that influenced by the

people on your team?

MR GRALA: Well, I don't think you can do an assessment of all those matters if

they're not on your team, so I wouldn't expect that you would -- if a 45

planner was running it, I wouldn't expect that they would be able to

understand or have a full awareness of risk matters and traffic. They

might have a general concept of it but they wouldn't be able to do a full

Page 6139


and adequate assessment, I wouldn't have thought.

MS DEVINE: In response to some of the questions from Mr Mulligan around the

communications between the parties around that period from June to

November when Mercury was faced with the alignment that crossed its 5

site, you made some statements around Mercury's stance on the power

station. To what extent do you understand Mercury accepting that the

road would be appropriate to locate across its site in that period?

MR GRALA: I think that my understanding is it was on the basis that they didn't lose 10

what they already had.

MS DEVINE: And that was ...

MR GRALA: An operable power station that they could restart, utilise their consents, 15

use the site generally in the kind of flexible manner that they currently

enjoy.

MS DEVINE: How long ago was the power station -- when was the power station

commissioned, do you know? 20

MR GRALA: I think it was first commissioned in 1996 with GE101 and 102 and then

it operated for about ten years and they added the third turbine, which

is GE105 in the mid-2000s, sort of around that time, 2005, 2006.

25

MS DEVINE: In terms of the questions Mr Mulligan raised about whether or not it

was lawfully established, in your opinion to what extent do you

consider the power station to have been lawfully established?

MR GRALA: I think they got all the consents in hand that they needed to to lawfully 30

establish it and they gave effect to them and implemented them.

MS DEVINE: If it were not lawfully established, what would you have expected the

councils to have done from 1996 onwards?

35

MR GRALA: I think they probably would have noticed that it was operating and they

may have given enforcement action. It is a bit hard to conceal.

MS DEVINE: In terms of if there were any breach of conditions, does that undermine

the basis upon which a consent is held or whether it is established and 40

operated?

MR GRALA: No, not in my view.

MS DEVINE: Just turning to reverse sensitivity, in response to questions from 45

Mr Mulligan, you said there were a couple of matters on reverse

sensitivity in terms of the solar R&D centre. To what extent is the NES

renewables relevant to the reverse sensitivity related to the solar?

Page 6140


MR GRALA: The NPS?

MS DEVINE: NPS, sorry.

5

MR GRALA: There is two -- I've covered it in my statement-in-chief. There is two

relevant policies. It is appendix A of my evidence-in-chief and

paragraph 3. There is two parts. There is one which is:

"Policy D requires decision-makers to manage effects, manage 10

activities to avoid the reverse sensitivity effects on existing renewable

electricity generation"

which we touched on but then there is also:

15

"Policy A that requires decision-makers to recognise and provide for

the national significance of renewable electricity generation."

[12.40 pm]

20

I guess that, in my mind, is relevant. When we're thinking about all

these unknowns that might happen if a project was to go ahead and if

there was a need to reconfigure or move the power station as a result

of the proposal in order to ensure that the residual health and safety

effects were acceptable, there is only really one spot to move, which is 25

to the north. So there is a potential effect that the solar research and

development centre is going to be displaced by either the power station

or other assets that need to be retained. So I don't see how the proposal

would provide for that if that was to --

30

MS DEVINE: When you say "provide for", what are you referring to there?

MR GRALA: Accommodate, retain.

MS DEVINE: To what extent are you referring to the NPS? 35

MR GRALA: Policy A. That is what the policy A envisages. The NPS envisages

that you're not going to have a project that is going to displace it or I

guess limit. When you look at the wider perspective, it is to limit the

ability for renewable generation to be developed. 40

MS DEVINE: In terms of conditions, Mr Mulligan drew you to your evidence-in-

chief in terms of conditions providing for outcomes. In terms of the

outcomes that Mercury is seeking to ensure that you're familiar with,

to what extent do the conditions proposed by NZ Transport Agency 45

provide for Mercury's outcomes that they're seeking?

MR GRALA: I think there are certain matters that they do but I think there is a couple

Page 6141


of really big ticket items that they don't still. The big ones that I've

identified in my summary statement: in my view I still don't think they

provide for an operable power station, which is what they currently

have. They don't provide for a number of the access outcomes that

Mr Carlisle views as necessary. There is still a real big concern I've 5

got about the outline plan waiver and how limited that is. The one that

Ms Hopkins has proposed is limited to just routine maintenance and

this is really problematic for the fact that GE105 is still within the

designation footprint, so it doesn't provide for the operation of that,

doesn't provide for non-routine maintenance. If, for example, it broke 10

down and it wasn't foreseen, you can't go in there and fix it or to

upgrade it. I guess the difficulty I have with that is the decision-maker

on whether they can do that is NZ Transport Agency because it would

be their designation, so you could end up in a scenario where anytime

they want to operate 105 or do anything to it you would have to get NZ 15

Transport Agency's approval.

MS DEVINE: Mr Mulligan asked you about parameters and you said that parameters

don't need to be in conditions. Is that based on your understanding of

typical -- to what extent is that based on normal risk assessment 20

processes?

MR GRALA: Talking to Mr Phillis, he was of the view that you don't typically

prescribe a lot in the conditions. You require that one happens but then

you leave it up to the experts as to what extent you need the certainty 25

there in terms of stipulating what the process they follow is.

MS DEVINE: In terms of that, how typical is it that there are conditions which address

effects that haven't been assessed to be addressed through conditions

rather than matters that are considered at a hearing? 30

MR GRALA: Very, very untypical.

MS DEVINE: Are you aware of Mr Erskine and Mr Phillis finding agreement about

what is an appropriate objective standard to apply to this particular 35

complex site?

MR GRALA: I'm not aware of any. I would have to look through. I think what

Mr Phillis was saying last week is that there is a number that you could

use. 40

[12.45 pm]

MS DEVINE: Are you aware of any agreement on what is the appropriate standard?

45

MR GRALA: No.

MS DEVINE: No further questions.

Page 6142


(witness excused)

DR PRIESTLEY: Thank you, Ms Devine.

5

MS DEVINE: It is the last witness for Mercury, sir, and your last witness.

DR PRIESTLEY: Well, I didn't have to reveal, counsel, that we'd negotiated an extra

20 minutes.

10

MS DEVINE: Work with your constraints, sir.

DR PRIESTLEY: Thank you for your co-operation, counsel. That has been really helpful.

Any housekeeping matters from either of you? You're lined up with

your approximate start date for your closing? 15

MS DEVINE: Yes, thank you, sir.

MR MULLIGAN: Nothing from me, sir.

20

DR PRIESTLEY: All right. We shall adjourn until 9.00 am on Monday.

MATTER ADJOURNED AT 12.46 PM UNTIL

MONDAY, 11 SEPTEMBER 2017

25

30