The TRC approval adds another dimension to this country’s increasingly tight and complex gas supply picture, as major industrial users contemplate insufficient gas available in a post-Maui age and energy companies fight for the future of gas.

Late last year Todd Energy strongly opposed Fonterra’s plans for its own 250MW coal-fired station to power the world’s largest single-site diary complex in south Taranaki, arguing before the TRC that the present 70MW gas-fired cogeneration plant should be retained.

However, the TRC - in its decision released last Friday - dismissed Todd Energy’s submissions that a new power station would be unnecessary and have no community benefit. The TRC did, though, halve the requested 10-year consent period, meaning Fonterra has to decide before 2010 whether to proceed with its coal-fired station.

The possible move to coal was foreshadowed last March by Fonterra chief executive Andrew Ferrier who said the major issue facing his company was not regulation, but energy.

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 sent for no real benefit to Fonterra’s farmers, Ferrier said.

Existing gas supply contracts for the 70MW co-generation plant expire next year and it is understood Fonterra and Todd are still finalising a new gas supply contract.