A court decision released yesterday describes Todd's appeal against resource consents for the power station as "specious and insubstantial", with the real argument for Todd’s actions being a fear of loss of business if the project went ahead, reports today’s Taranaki Daily News.

The court not only threw out Todd’s appeal but doubled the time – from five to ten years - that Fonterra can choose to go ahead with the project without having to re-apply for the necessary resource consents.

Judge Thompson’s decision painted a picture of Todd and Fonterra jostling for commercial advantage over the supply of energy required to run Fonterra's Whareroa complex – even to the extent of accusing each other of misusing the resource management process for ulterior commercial purposes, said the paper.

Whareroa - the largest single-site dairy complex in the world – produces a range of dairy products which, in the 2003-04 season, was worth NZ$1.15 billion.

A partnership that includes Todd Energy supplies natural gas to Whareroa from the nearby Kapuni field. The value of the gas supplied in the last March financial year about NZ$16 million. But the current gas supply contract – for the present 70MW gas-fired cogeneration plant in which Todd Energy is a partner – is due to expire next July.

Two years ago Fonterra applied for, and was later granted, land use and discharge consents to enable it to build a NZ$100 million, 250MW power station at Whareroa that could run on either gas or coal. If built, it would largely replace the existing joint venture plant.

Todd subsequently appealed, with the subject of its appeal being only one of the many consents issued by the South Taranaki District Council and Taranaki Regional Council – a TRC consent authorising discharge of emissions into the air via a 60m-high boiler stack. But Todd’s court arguments against the proposed dual-fuel plant were more wide-ranging.

Todd said the dual fuel proposal was unnecessary because there would be no shortage of gas into the foreseeable future and that supplies of gas could be secured from Todd or other suppliers on viable terms.

"Both Fonterra and Todd accuse each other of using, or misusing, the resource management process for ulterior commercial purposes. Todd argues that Fonterra has no intention of building the plant and simply wants to use the possibility of it for negotiating leverage. Fonterra makes corresponding criticisms of Todd's opposition to the proposal," said Judge Thompson.

The possible move to dual-fuel was foreshadowed in March 2004 by Fonterra chief executive Andrew Ferrier who said Fonterra had 29 plants in New Zealand that ran on natural gas. If these had to be converted to coal over the next 10 years, because of a lack of competitively priced gas, that would be a huge amount of capital spent for no real benefit to Fonterra’s farmers.