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5. National Policy Statement Evaluation

The following evaluation is broken into two subsections corresponding with the evaluation of the objective and the evaluation of the policies included in the NPS. For the purposes of a section 32 evaluation under the RMA, the terms ‘costs’ and ‘benefits’ take broad meanings and include environmental, social and economic matters.

5.1 Objective evaluation

5.1.1 Introduction

Section 32 requires that the evaluation must examine the extent to which the objective included in the NPS is the most appropriate way to achieve the purpose of the RMA.

The purpose of the RMA is to promote the sustainable management of natural and physical resources, which means:

… managing the use, development, and protection of natural and physical resources in a way, or at a rate, which enables people and communities to provide for their social, economic, and cultural wellbeing and for their health and safety while—

  1. Sustaining the potential of natural and physical resources (excluding minerals) to meet the reasonably foreseeable needs of future generations; and
  2. Safeguarding the life-supporting capacity of air, water, soil, and ecosystems; and
  3. Avoiding, remedying, or mitigating any adverse effects of activities on the environment.

The objective of the NPS seeks the following outcome:

To recognise the national significance of the electricity transmission network by facilitating the operation, maintenance and upgrade of the existing transmission network and the establishment of new transmission resources to meet the needs of present and future generations, while:

  • managing the adverse environmental effects of the network; and
  • managing the adverse effects of other activities on the network.

The objective seeks outcomes in relation to three elements: the national significance of transmission; management of adverse environmental effects on the network; and managing the adverse effects of other activities on the network. The following evaluation considers each of these elements in turn, against the purpose of the RMA.

Based on the evaluation included in these three sections, it is considered that the objective represents the most appropriate way to achieve the purpose of the RMA. Broadly, it is considered that the objective appropriately reflects the balance contained within the Act’s purpose between enabling the use and development of resources, in this case a nationally significant resource, and managing the adverse environmental effects of this use and development.

5.1.2 Recognising the national significance of the network

Given the value of the network to the nation (section 3.1.1), seeking recognition of it through the facilitation of the use, maintenance, upgrade and development is an appropriate objective in terms of the purpose of the RMA.

This component of the objective clearly relates to the first portion of the purpose of the Act, which seeks to enable the use and development of resources, including physical resources such as the network, so that people and communities can meet their needs. The first element of the objective serves to build upon this broad intent within the Act’s purpose by setting specific direction in relation to the nationally significant network.

5.1.3 Managing adverse environmental effects of the network

There is a significant body of policy material in existence which addresses the adverse environmental effects of activities, including those of the transmission network and which covers a broad range of environmental issues. This body of policy material is provided through the various district and regional plans and regional policy statements that exist across the country, for example, the Greater Wellington Regional Council points out that all chapters of the Wellington Regional Policy Statement address the adverse environmental effects of activities.16

To date, local authorities have not identified significant gaps in the current policy framework, nor that such gaps are creating difficulty for local authorities as they seek to manage the adverse effects of the transmission network. Thus, it appears questionable whether a significant resource management issue exists in relation to the management of the adverse effects of electricity transmission.

Notwithstanding this, the general intent of the statement within the objective offers a degree of appropriateness in relation to the purpose of the RMA because it provides a balance to recognising the importance of the transmission network. The statement in the objective recognises both the potential of the transmission network to create adverse environmental effects and the need to balance these with recognition and provision for its benefits. The Environment Court has, in the past, placed ‘great weight’ on the only existing national policy statement, the New Zealand Coastal Policy Statement. Assuming that such weight will be placed on this NPS should it be adopted, then it would seem appropriate that it provides a balanced direction for decision-makers and does not rely on documents lower in the RMA hierarchy, or the RMA itself, to achieve this.

A second point that would lend support to the appropriateness of the statement in the objective would be if it, and its related policies, offered specific national guidance as to how the adverse environmental effects of electricity transmission are best managed. At present, most of the RMA-based policy framework under which the adverse effects of electricity transmission are addressed is generic to infrastructure, or even more broadly, to all activities. If the NPS was able to offer specific guidance in relation to electricity transmission, recognising the particular characteristics of the network and its national benefits, then such guidance would add value to the current policy framework rather than just adding a further layer to it.

While the statement on managing the adverse environmental effects is general and, to an extent, simply repeats the requirements of the Act, the policies add further specificity in relation to the environmental values which need to be addressed, and to how adverse effects on these values should be managed.

5.1.4 Managing adverse effects of others’ activities on the network

This statement on managing the adverse effects of others’ activities in the objective is appropriate in terms of the purpose of the RMA, which refers, among other things, to “avoiding, remedying, or mitigating any adverse effects of activities on the environment”. As the environment is defined to include physical resources, and the transmission network is a physical resource, seeking to manage the effects of activities that could disrupt its efficient and reliable operation is entirely appropriate. Furthermore, section 7(b) of the RMA states that those exercising functions under the Act shall have particular regard to “the efficient use and development of natural and physical resources”. Again, in this context, the statement made in the objective is entirely appropriate.

In respect of both sections 5 and 7 of the RMA, it is noted that there are a large number of potential sources of adverse effects on transmission operations. These involve high transaction costs in managing them individually and/or in seeking remedies after problems have arisen. Such costs would be avoided or reduced by a preventative approach as proposed in the objective.

5.2 Evaluation of policies

The evaluation of the appropriateness of the 14 policies considers the efficiency and effectiveness of each policy individually. Criteria for this evaluation are set out in sections 5.2.1 and 5.2.2 below.

The evaluation of policies then concludes with a summary of all 14 policies to assess how they fit together as a package under the NPS objective. The assessment of the overall appropriateness of the package of policies includes consideration of the uncertainties and information limitations inherent in the proposed policies. Consideration of the appropriateness of the package of policies is necessary as it is recognised that while each policy will go some way to fulfilling the objective, and must do so to be considered appropriate, no one policy will be fully effective in achieving the objective. In other words, it is very unlikely that a single policy could be considered the ‘most appropriate’ way to achieve the objective.

5.2.1 Effectiveness

For the purposes of evaluating ‘effectiveness’, two elements are considered. The first is whether the policies address the full scope of matters covered in the objective. In this regard, it is noted that the objective seeks outcomes in relation to three key matters:

  • recognition of the benefit of the grid through the facilitation of its operation, maintenance, upgrade and development

  • management of adverse environmental effects of the grid

  • management of adverse effects of activities on the grid.

The second element of effectiveness is how successful the policies are likely to be in achieving the outcomes sought in the objective. In order to determine this, the range of policy approaches included in the NPS is evaluated against the range of policy approaches available. In completing this part of the evaluation, it is recognised that a more limited range of policy approaches is available for use in an NPS than in other RMA policy statements or plans. The policy approaches considered to be available to an NPS are:

  • plan / policy statement changes – policies that require regional policy statements and district or regional plans to address specific matters

  • resource consent / notice of requirement guidance – policies that provide guidance on matters that need to be considered as part of resource consent applications and notice of requirement considerations.

5.2.2 Efficiency

When considering the efficiency of each policy, we examined the costs and benefits associated with:

  • the environment

  • land owners

  • the grid operator (Transpower)

  • local government (district, city and regional councils)

  • government

  • consumers

  • others / generators.

It is hard to avoid some overlap in an assessment disaggregated across so many different parties. For instance, things that directly affect Transpower as grid operator also indirectly affect electricity consumers, to the extent that its costs and savings are passed on through the transmission pricing mechanism into the cost of electricity to consumers. They also affect the government as Transpower’s shareholder, and also affect the risk of government involvement in the event of consequences arising from failings in the transmission network. In a quantified analysis, these overlaps would need to be netted off carefully to avoid double-counting, but in a qualitative analysis, such precision is less critical, and it can still be informative to look at the distribution of effects across different parties.

For evaluating ‘efficiency’ it is necessary to be satisfied that the NPS achieves a net benefit or, at the least, that it is effective at minimal cost. With a change in policy there are two sorts of costs to be considered. ‘Transaction costs’ are incurred by all parties in familiarising themselves with the new rules and in complying with them (eg, in gathering information for application for consents or consultation with other parties). ‘Consequential costs’ are incurred by parties if the rules require them to appreciably change behaviour or activities over what they would otherwise have done without the NPS (eg, re-routing or modifying grid design, delays and so on). The sum of transaction and consequential costs should be less than the value of benefits obtained for the NPS to be efficient.

To the extent that the NPS clarifies meaning and reduces differences in interpretation between the parties, it can be expected to reduce such transaction costs, although in some circumstances it may just redirect transaction cost generation into new areas. The second category of costs are what might be termed consequential costs, the use of resources in new ways as a result of the NPS. For instance, a policy that required the grid operator to consider further route options for its grid upgrades could result in both increased transaction costs (from the enhanced consideration of options) and increased consequential costs if it resulted in a longer or more difficult route being chosen as a means of managing the environmental effects.

The precise extent of transaction and consequential costs is indeterminate, because local authorities retain discretion in how they implement an NPS. But transaction costs are somewhat more tangible and ‘certain’ than consequential cost effects which depend on the discretionary responses of many other parties and external factors.

In the framework of analysis used here, benefits are primarily the avoidance of costs that would otherwise be expected to occur in continuation of the status quo. Other benefits are considered, including potential environmental or health benefits. Costs are additions to the transaction or real costs, relative to the status quo. As with benefits, other costs, such as adverse environmental impacts, are considered. The general effects on the parties are expected to be along the lines listed below.

A positive benefit for the grid operator would:

  • benefit the grid’s customers to some degree, including both electricity consumers and generators (including prospective owners of new generation)

  • benefit the government as owner of the grid operator and risk-bearer of last resort for failures in the transmission system

but

  • effects on the environment around the grid could be unchanged or negative to some degree

  • effects on adjoining land owners could also be neutral or negative, but with a heavier tendency to negative because of the perceptions of encroachment on rights and uses of land

  • effects on local councils could be difficult to determine, as there may be savings in transaction costs from clarification of entitlements, as well as some loss in local discretion over the relative weighting given to national and local issues.

There can be exceptions to this general pattern, as is apparent in consideration of the separate policies in the NPS.

We have also indicated whether a cost or benefit is large, medium or small. The rule we have used is that:

  • large costs or benefits are over $1.5 million

  • medium costs or benefits are between $0.5 and $1.5 million

  • small costs and benefits are below $0.5 million.

5.2.3 Policy 1

In achieving the purpose of the Act, decision-makers must recognise and provide for the national, regional and local benefits of sustainable, secure and efficient electricity transmission. The benefits relevant to any particular project or development of the electricity transmission network may include:

  1. maintained or improved security of supply of electricity; or
  2. efficient transfer of energy through a reduction of transmission losses; or
  3. the facilitation of the use and development of new electricity generation, including renewable generation which assists in the management of the effects of climate change; or
  4. enhanced supply of electricity through the removal of points of congestion.

The above list of benefits is not intended to be exhaustive and a particular policy, plan, project or development may have or recognise other benefits.

Overall, it is considered that Policy 1 is appropriate in relation to the objective. The reasons for this conclusion are outlined in the following two sections.

a. Effectiveness

In Table 3 the effectiveness of Policy 1 is shown by placing ticks alongside the parts of the objective that Policy 1 covers. Policy 1 is effective in terms of recognising the national benefit, particularly the specific reference to the national benefits of transmission. The policy will influence the full range of functions exercised by local authorities under the RMA and, by doing so, should ensure that local authorities have regard to the benefits of electricity transmission in their decision-making.

It also partly assists managing effects of others on the grid (½ tick).

b. Efficiency

Policy 1 is expected to efficiently achieve the outcome sought in the objective. With the recognition of the national benefits of transmission, Policy 1 gives the grid operator (Transpower) assistance in its quest to have consistent rules across all councils; however, it also allows councils discretion as to how they go about complying with the NPS. Table 3 shows the efficiency (costs and benefits) associated with Policy 1.

Policy 1 will have a neutral effect on the environment since Transpower is currently able to achieve most of its network objectives. Under the guidance of Policy 1, the same outcome could be achieved at less cost.

For land owners, Policy 1, in conjunction with Policies 2, 10 and 11 will have a negative impact on the way they can utilise their land and other assets close to transmission lines. This is because these policies require the introduction of district and regional plan rules, which means that land owners will have less discretion about what they can and cannot do. This creates a potential consequential cost on their operations, which will vary across districts, but it is likely to increase their transaction costs in dealing with district, city and/or regional councils as they become familiar with the NPS and the intent of Policy 1.

The benefits of Policy 1 will result from the increased certainty for transmission arising from its benefits being taken into account by local authorities as part of decision-making under the RMA. Transpower currently spends significant time advocating for plan provisions that provide for and recognise the benefit of the transmission network. Equally, Transpower spends significant time challenging plan provisions which take a very localised view of the transmission network, eg, provisions which require lines to be under-grounded. The cost of Transpower’s plan advocacy activities is likely to be reduced by the introduction of Policy 1, which will legitimise the arguments currently being made.

Table 3: Summary of effectiveness and efficiency of Policy 1

Effectiveness

Recognition of national benefit

Manages effects of the grid on the environment

Manages effects of others on the grid

½√

Impacts on council plans

Impacts on resource consents and designations

Efficiency

Environment

Neutral

Land owners

Medium cost. Increased transaction costs

Grid operator (Transpower)

Small benefit. Decreased transaction costs (less advocacy)

Local government

Medium cost. Decreased transaction costs with Transpower, increased transaction costs with land owners

Government

Small benefit. Reduced risks associated with the network

Consumers

Small benefit. Reduced risks associated with the network

Others / generators

Small benefit. Favourable (particularly for new projects such as renewables)

Source: NZIER

In relation to specific proposals, it is noted that the benefit of Policy 1 is likely to be increasingly important over the next 10 years as Transpower seeks to undertake the major works necessary to provide for the nation’s growing energy demands.

The costs and benefits of Policy 1, which seeks to direct the content of district / regional plans, will also occur for local authorities and their ratepayers, and will be associated with the amendments to those plans necessary to give effect to the policy. On the benefit side, transaction costs in dealing with Transpower will be reduced since clear instructions are given in Policy 1 on the importance of the national benefits of transmission. On the cost side, transaction costs are likely to rise because land owners will be constrained by what they can and cannot do around transmission lines.

The costs of policy and plan changes giving effect to Policy 1 will be significant if local authorities are challenged through the Environment Court with regard to how they choose to give effect to the policy. For this reason, explicitly referring to ‘national benefits’ in Policy 1 helps clarify that local authorities need to explicitly provide for such benefits in their plans and policy statements. Notwithstanding this, the relatively broad nature of the policy allows implementation discretion. It is noted that discretion by councils on how they implement Policy 1 could lead to some uncertainty. This is because how councils will give effect to it is still uncertain. Further, costs are likely to be higher for those councils that will be first to incorporate the NPS in their plans (‘first cab off the rank’ effect) and for those that are required, by the four-year implementation timeframe, to make the changes outside of their normal plan review cycle or plan change process.

For government and consumers, the national recognition of the benefits of transmission will reduce the risks associated with the network since Transpower’s transaction costs will be reduced and approval times shortened.

Policy 1 is also likely to be favourable to generators, particularly those dependent on new or upgraded lines. Since many renewable energy resources are remote from the national grid, the recognition of the national benefit of electricity is likely to assist new renewable energy connections with the national grid.

5.2.4 Policy 2

In achieving the purpose of the Act, decision-makers must recognise and provide for the effective operation, maintenance, upgrading and development of the electricity transmission network.

Overall, it is considered that Policy 2 is appropriate in relation to the objective. The reasons for this conclusion are outlined in the following two sections.

a. Effectiveness

Policy 2 builds on Policy 1, and its role is more procedural and directional. The use of the words “… shall recognise and provide for …” give strong signals to decision-makers, reinforcing the intent of Policy 1. Therefore, it is effective in achieving the outcome sought in the objective – particularly the first paragraph.

Policy 2 is effective in recognising the national benefit (particularly the first paragraph) since it reinforces Policy 1 and provides specific direction (see Table 4). The policy will influence the full range of functions exercised by local authorities under the RMA (plans, policy, resource consents and designations) and, by doing so, should ensure that local authorities have regard to the operational aspects of grid maintenance, upgrading and development.

Further, Policy 2 is partly effective in recognising and managing the effects of others on the grid.

Table 4: Summary of effectiveness and efficiency of Policy 2

Effectiveness

Recognition of national benefit

Manages effects of the grid on the environment

Manages effects of others on the grid

½√

Impacts on council plans

Impacts on resource consents and designations

Efficiency

Environment

Medium cost. Operational effects with possible costs to the environment

Land owners

Medium cost. Increased transaction costs (less discretion)

Grid operator (Transpower)

Small benefit. Decreased transaction costs (less advocacy)

Local government

Medium cost. Decreased transaction costs with Transpower, increased transaction costs with land owners

Government

Small benefit. Reduced risks associated with the network

Consumers

Small benefit. Reduced risks associated with the network

Others / generators

Small benefit. Favourable (particularly for new projects such as renewables)

Source: NZIER

b. Efficiency

In this regard, the policy’s costs and benefits are similar to Policy 1 (see Table 4).

Policy 2, because of the strong direction, may have some impact on the environment. It goes further than Policy 1, specifically directing councils to recognise and provide for not only the maintenance and upgrading of the grid, but also grid development. This suggests possibly a higher environmental cost could be incurred relative to the status quo.

For land owners, Policy 2 reinforces the change in the way they can utilise their land and other assets close to transmission lines implied in Policy 1 and explicit in Policies 10 and 11. Therefore, it is likely to increase their transaction costs in dealing with district, city and/or regional councils, as well as potentially incurring consequential costs if they have to change or halt activities around transmission lines.

Transpower is assisted by Policy 2. The cost of Transpower’s plan advocacy activities is likely to be reduced by the introduction of Policy 2, which will legitimise its arguments currently being made under the status quo.

Policy 2 is likely to generate a mixture of costs and benefits for local councils. On the benefit side, transaction costs in dealing with Transpower will be reduced since clear instructions are given on how local councils should approach the operation, maintenance, upgrade and development of the grid. On the cost side, transaction costs are likely to rise because land owners will be constrained by what they can and cannot do around transmission lines.

For government, consumers and others / generators, the directional nature of Policy 2 is likely to be favourable since it reduces Transpower’s transaction costs.

5.2.5 Policy 3

When considering measures to avoid, remedy or mitigate adverse environmental effects of transmission activities, decision-makers must consider the constraints imposed on achieving those measures by the technical and operational requirements of the network.

Overall, it is considered that Policy 3 is appropriate in relation to the objective. The reasons for this conclusion are outlined in the following two sections.

a. Effectiveness

Policy 3 is specific in its requirement for decision-makers to take into consideration the technical and operational requirements of the grid. It gives unclear direction in relation to the first paragraph of the objective, and is partly effective in managing the effects of the grid on the environment (see Table 5).

The policy will influence the full range of functions exercised by local authorities under the RMA (plans, policy, resource consents and designations) and, by doing so, should ensure that local authorities have regard to the technical and operational grid requirements.

b. Efficiency

Policy 3 costs and benefits are also detailed in Table 5.

Policy 3, because of its specific reference to technical and operational requirements, may have some detrimental impacts on the environmental outcomes relative to the status quo. The explicit reference to technical and operational requirements justifies / suggests that some environmental losses will be realised because of grid requirements.

Table 5: Summary of effectiveness and efficiency of Policy 3

Effectiveness

Recognition of national benefit

√ (indirect)

Manages effects of the grid on the environment

½√

Manages effects of others on the grid

Impacts on council plans

Impacts on resource consents and designations

Efficiency

Environment

Medium cost. Implies that technical and operational requirements can override environmental considerations.

Land owners

Medium cost. Increase transaction and consequential costs

Grid operator (Transpower)

Small benefit. Decrease transaction and consequential costs

Local government

Medium cost. Decreased transaction costs with Transpower, increased transaction costs with land owners

Government

Small benefit. Improved efficiency of the network benefits government

Consumers

Small benefit. Improved efficiency of the network benefits consumers

Others / generators

Small benefit. Improved efficiency of the network benefits others / generators

Source: NZIER

For land owners, Policy 3 has the possibility of incurring both transaction and consequential costs, again because of the reference to technical and operational requirements. As well as increased transaction costs in dealing with district, city and/or regional councils, land owners could face consequential costs (ie, shifting or curtailing activities close to transmission lines).

Transpower is assisted by Policy 3. The cost of Transpower’s plan advocacy activities is likely to be reduced by the introduction of Policy 3 which will legitimise some of its arguments currently being made under the status quo. Not only will transaction costs be saved, there is also a possibility that consequential costs might be saved because of the weight given in Policy 3 to the importance of technical and operational costs. It is noted that ‘operational requirements’ have the potential to cover a wide range of grid operating situations, and there is some uncertainty as to how widely this could be applied by Transpower.

Policy 3 is likely to generate a mixture of costs and benefits for local councils. On the benefit side, transaction costs in dealing with Transpower will be reduced since clear instructions are given on how local councils should approach technical and operational requirements. On the cost side, transaction costs are likely to rise because land owners will be constrained by what they can and cannot do around transmission lines.

For government, consumers and others / generators, Policy 3 is likely to improve efficiency of the network and network security, generating a small benefit.

5.2.6 Policy 4

When considering the environmental effects of new transmission infrastructure or major upgrades of existing transmission infrastructure, decision-makers must have regard to the extent to which any adverse effects have been avoided, remedied or mitigated by the route, site and method selection.

Overall, it is considered that Policy 4 is appropriate in relation to the objective. The reasons for this conclusion are outlined in the following two sections.

a. Effectiveness

Policy 4 will be effective in achieving the outcome sought in the objective, particularly the first bullet point since it reinforces the intent of the objective and gives consideration to environmental outcomes (see Table 6). In particular it is noted that, indirectly, Policy 4 requires Transpower to evaluate the relative environmental merits of alternative routes, sites and methods for major upgrades. It is considered that this requirement will have a significant influence in relation to the management of the environmental effects of the network.

In relation to effectiveness, it is also noted that Policy 4 will influence the full range of functions exercised by local authorities under the RMA (plans, policy, resource consents and designations) and, by doing so, should ensure that local authorities have regard to, and have the ability to require recognition of, alternatives when managing environmental outcomes.

b. Efficiency

For the environment (see Table 6), the use of the words “which any adverse effects have been avoided, remedied or mitigated” in Policy 4 introduces possible net benefits for the environment. While the development of new transmission lines may have some environmental losses, the importance of considering improved (environmental) site and line placement has the potential for net environmental gains relative to the status quo.

Policy 4 is likely to have net benefits for land owners since planned grid developments are required to consider environmental outcomes. It is possible that this will benefit land owners since environmental outcomes will be considered when route selection occurs. Some of this will be a transfer effect of no consequence for cost–benefit assessments – one landholder’s gain is another’s loss in route selection – but on the assumption that environmental effects along each route are assessed correctly and factored into route selection, there should be a net reduction in adverse environmental effects.

For Transpower, Policy 4 could increase transaction and consequential costs since indirectly it has to consider how best to avoid, mitigate or remedy environmental issues through route, site and method selection. Environmental considerations may increase transactions costs (dealing with councils) and consequential costs (re-routing or considering alternative routes for transmission lines).

Policy 4 may be a net benefit for government, despite the possible increased costs associated with Transpower’s considering alternative site and route selections. The social benefit, because of improved environmental outcomes, may outweigh costs associated with considering alternative routes or site placement.

Policy 4 is a potential cost for consumers and others / generators since it is likely to increase costs for Transpower and therefore increase the price paid for power.

Table 6: Summary of effectiveness and efficiency of Policy 4

Effectiveness

Recognition of national benefit

Manages effects of the grid on the environment

Manages effects of others on the grid

Impacts on council plans

Impacts on resource consents and designations

Efficiency

Environment

Medium benefit

Land owners

Possible net benefit

Grid operator (Transpower)

Medium cost. Possible increase in transaction and consequential costs

Local government

Small benefit. Possible reduction in transaction costs

Government

Some net benefit since it gives protection to the environment

Consumers

Small net loss

Others / generators

Small net loss

Source: NZIER

5.2.7 Policy 5

When considering the environmental effects of transmission activities associated with transmission assets, decision-makers must enable the reasonable operational, maintenance and minor upgrade requirements of established electricity transmission assets.

Overall, it is considered that Policy 5 is appropriate in relation to the objective. The reasons for this conclusion are outlined in the following two sections.

a. Effectiveness

Policy 5 will be effective in achieving the outcome sought in the objective since it addresses the first paragraph and the first bullet point (of the objective). In particular, it does so by requiring decision-makers to enable operation, maintenance and minor upgrade of the network. However, Policy 5 does not give unqualified approval to maintenance and minor upgrade requirements since it acknowledges, through the inclusion of the word ‘reasonable’, the importance of environmental effects. Policy 5 will have only small costs for the environment since it is unlikely to change environmental outcomes relative to the status quo (Table 7).

The policy will influence the full range of functions exercised by local authorities under the RMA and, by doing so, should ensure that local authorities enable the operation, maintenance and minor upgrade of the network through plan provisions or decisions on resource consent applications.

b. Efficiency

There may be some adverse impact on the environment as result of Policy 5, as it is likely to result in more permissive plan provisions relating to the operation, maintenance and minor upgrade of the network. However, these impacts should be minor (small cost) given the minor nature of the transmission activities involved and the reasonably high number of councils that already enable these activities through their plans.

For land owners, Policy 5 represents a small change to the status quo and therefore transaction costs are likely to be small.

Table 7: Summary of effectiveness and efficiency of Policy 5

Effectiveness

Recognition of national benefit

Manages effects of the grid on the environment

Manages effects of others on the grid

Impacts on council plans

Impacts on resource consents and designations

Efficiency

Environment

Small costs

Land owners

Small transaction costs

Grid operator (Transpower)

Medium benefit. Transaction costs reduced

Local government

Small benefit. Decreased transaction costs with Transpower, increased transaction costs with land owners (both relatively small)

Government

Small benefit

Consumers

Small benefit

Others / generators

Small benefit

Source: NZIER

Transpower will gain a medium benefit from Policy 5 since transaction costs are likely to be reduced as minor upgrades, maintenance and operational requirements no longer incur potentially large transaction costs. Under the status quo, councils do not provide for minor upgrades, maintenance and operational requirements in their plans. It can be expected that most, if not all, of these councils will alter their plans as a result of Policy 5 in a manner that reduces the transaction costs to Transpower.

There will be a mixture of costs and benefits associated with Policy 5 for local authorities. On the benefit side, transaction costs in dealing with Transpower will be reduced slightly since direction has been given on minor upgrades and maintenance. On the cost side, transaction costs may rise because land owners may challenge plan provisions intended to give effect to the policy because of perceived implications for their ability to obtain compensation from Transpower. Overall, a small benefit is expected.

Notwithstanding this conclusion with regard to local authority costs and benefits, one uncertainty is noted around the word ‘minor’. How this is defined will have a major bearing on costs and benefits. In this regard, if the term is defined through plan provisions so that it does not include a broad enough range of activities, Transpower is likely to challenge the plan provisions. Conversely, if local authorities define the term too broadly, greater land owner resistance can be expected.

For government, consumers and others / generators, small benefits are likely to accrue since security of the network will be enhanced slightly.

5.2.8 Policy 6

Substantial upgrades of transmission infrastructure should be used as an opportunity to reduce existing adverse effects of transmission including such effects on sensitive activities17 where appropriate.

Overall, it is considered that Policy 6 is appropriate in relation to the objective. The reasons for this conclusion are outlined in the following two sections.

a. Effectiveness

Policy 6 will be effective in achieving the outcome sought in the objective. This conclusion is reached since, by encouraging the reduction of existing adverse effects, it addresses the first bullet point, but, by the inclusion of the phrase ‘where appropriate’, does not disregard the first paragraph of the objective. Policy 6 is somewhat opportunistic in that it directs those planning upgrades to consider taking advantage of ways to mitigate impacts on sensitive activities.

The policy will influence the full range of functions exercised by local authorities under the RMA (plans, policy, resource consents and designations) and, by doing so, should ensure that local authorities, and Transpower, consider opportunities to reduce environmental effects when substantial upgrades are undertaken.

b. Efficiency

Policy 6 is likely to have a positive effect on the environment because, if mitigation of environmental effects is possible and feasible, it should then be undertaken (see Table 8).

For land owners, Policy 6 represents a small positive change to the status quo and therefore it should reduce transaction costs incurred since some of the impacts on land near transmission lines will be mitigated.

Transpower could possibly incur transaction and consequential costs from Policy 6. Transpower will be required to document its rationale for selecting particular routes and detail / consider the effect on the environment (increase in transaction costs). This may mean that it incurs consequential costs as well as transaction costs since the final route selection may be influenced by environmental considerations.

This process will potentially add costs for local authorities, particularly in their dealings with Transpower, especially if Transpower’s preferred option does not align with council interpretation of Policy 6. In particular, it is noted that the policy includes words and phrases such as ‘substantial upgrade’ and ‘where appropriate’, which imply discretion and therefore are likely to be the subject of debate through RMA decision-making processes.

For government, consumers and others / generators, Policy 6 is likely to increase costs slightly because grid security might be slightly compromised.

Table 8: Summary of effectiveness and efficiency of Policy 6

Effectiveness

Recognition of national benefit

Manages effects of the grid on the environment

Manages effects of others on the grid

Impacts on council plans

Impacts on resource consents & designations

Efficiency

Environment

Medium benefit

Land owners

Small benefits. Less transaction cost with councils

Grid operator (Transpower)

Medium costs. Transaction and consequential costs

Local government

Small cost. Increased transaction costs with Transpower

Government

Small cost

Consumers

Small cost

Others / generators

Small cost

Source: NZIER

5.2.9 Policy 7

Planning and development of the transmission system should minimise adverse effects on urban amenity and avoid adverse effects on town centres and areas of high recreational value or amenity and existing sensitive activities.18

Overall, it is considered that Policy 7 is appropriate in relation to the objective. The reasons for this conclusion are outlined in the following two sections.

a. Effectiveness

Policy 7 will be effective in achieving the outcome sought in the objective since it addresses the first objective bullet point. Policy 7 specifically points to a wide range of urban environments where adverse effects should be minimised or avoided. Therefore, the direction to decision-makers of Policy 7 is relatively strong (see Table 9).

Like all policies within the NPS which seek to address the adverse effects of transmission activities, a key element in determining the effectiveness of Policy 7 is whether it provides clear and specific policy guidance which adds value to the existing extensive body of RMA policy material addressing the adverse effects of activities. It is clear that Policy 7 represents an attempt to do this by recognising urban amenity concerns and thereby reflecting recent national efforts in relation to good urban design.

The policy will influence the full range of functions exercised by local authorities under the RMA and, by doing so, should ensure that local authorities and Transpower have regard to environmental outcomes in the urban setting when making decisions in relation to the planning and development of the transmission system.

b. Efficiency

Policy 7 is likely to have a positive effect on the environment since, for many urban environments, it sets the relatively high threshold of avoiding environmental effects (see Table 9). The urban environments included within the ‘avoid’ part of the policy are broad, excluding only areas with relatively low amenity, such as industrial areas.

For land owners, Policy 7 represents a positive change to the status quo and therefore it should reduce transaction costs incurred since some of the environmental impacts on land near transmission lines in urban areas could be mitigated.

Table 9: Summary of effectiveness and efficiency of Policy 7

Effectiveness

Recognition of national benefit

Manages effects of the grid on the environment

Manages effects of others on the grid

Impacts on council plans

Impacts on resource consents and designations

Efficiency

Environment

Medium benefit

Land owners

Medium benefits. Less transaction costs with councils

Grid operator (Transpower)

Medium costs. Transaction and consequential costs

Local government

Small cost. Increased transaction costs with Transpower

Government

Small cost

Consumers

Small cost

Others / generators

Small cost

Source: NZIER

Because Policy 7 implies a requirement upon Transpower to consider in some detail how it will minimise or avoid the adverse impacts of the transmission system in urban areas, Transpower could incur increased transaction costs and possibly increased consequential costs in changing its proposals and overall planning. Transpower will be required to document its rationale for selecting particular routes and detail how these minimise or avoid adverse effects on the environment (increase in transaction costs). This may mean that it incurs consequential costs as well as transaction costs, since the final route selection in urban areas is likely to need to avoid certain areas.

This process set out by Policy 7 gives clear guidance to local government; however, it could increase its transaction costs with Transpower.

For government, consumers and others / generators, Policy 7 is likely to add costs since grid efficiency and security might be slightly compromised.

5.2.10 Policy 8

In rural environments, planning and development of the transmission system should seek to avoid adverse effects on outstanding natural landscapes, areas of high natural character and areas of high recreation value and amenity and existing sensitive activities.19

Overall, it is considered that Policy 8 is appropriate in relation to the objective. The reasons for this conclusion are outlined in the following two sections.

a. Effectiveness

Policy 8 will be effective in achieving the outcome sought in the objective since it addresses the first bullet point (see Table 10). Policy 8 points to a range of rural environments where adverse effects should be minimised. It should be noted that the use of the words “seek to avoid adverse …”, while not as strong as protection afforded urban environments in Policy 7, still present a relatively strong direction to those involved in the planning and development of the transmission system. It is noted that while the policy is relatively broad in relation to the rural environments covered, it does not cover rural environments valued only for their economic activity (ie, areas which do not have high natural value), such as those used for farming or farm-based tourism.

The policy will influence the full range of functions exercised by local authorities under the RMA and, by doing so, should ensure that local authorities have regard to environmental outcomes on specified rural amenities and sensitive activities in their decision-making.

Table 10: Summary of effectiveness and efficiency of Policy 8

Effectiveness

Recognition of national benefit

Manages effects of the grid on the environment

Manages effects of others on the grid

Impacts on council plans

Impacts on resource consents and designations

Efficiency

Environment

Medium benefit

Land owners

Medium benefit. Less transaction costs with councils

Grid operator (Transpower)

Medium costs. Transaction and consequential costs

Local government

Small cost. Increased transaction costs with Transpower

Government

Small cost

Consumers

Small cost

Others / generators

Small cost

Source: NZIER

a. Efficiency

Policy 8, which is similar to Policy 7, is likely to have a positive effect on the environment, relative to the status quo, since it sets the relatively high threshold of seeking to avoid environmental effects (see Table 10).

For land owners, Policy 8 represents a positive change to the status quo and therefore it should reduce transaction costs incurred, since some of the impacts on land near transmission lines in rural areas could be mitigated.

Because Policy 8 implies a requirement upon Transpower to consider in some detail how it will seek to avoid the adverse impacts of the transmission system on valued rural environments, Transpower could incur increased transaction costs and possibly increased consequential costs in changing its proposals. Transpower will be required to document its rationale for selecting particular routes and detail how these avoid adverse effects on the environment (increase in transaction costs). This may mean that it incurs consequential costs as well as transaction costs since planning and decision-making around upgrades and new routes in rural areas may need to avoid certain areas.

The process set out by Policy 8 gives clear guidance to local government; however, it could reduce its transaction costs with Transpower since it is expected that Transpower will contest its meaning.

For government, consumers and others / generators, Policy 8 is likely to add costs because of the increased costs to Transpower.

5.2.11 Policy 9

Provisions dealing with electric and magnetic fields (EMF) associated with the electricity transmission network must be based on the Icnirp20 guidelines and recommendations from WHO21 or revisions thereof and any applicable New Zealand standards or national environmental standards.

Overall it is considered that Policy 8 is appropriate in relation to the objective. The reasons for this conclusion are outlined in the following two sections.

a. Effectiveness

Policy 9 is likely to be effective in relation to the objective, particularly in relation to its second bullet point (Table 11). Policy 9 represents an appropriate response to known medical risks. Policy 9 acknowledges that standards are based on a current scientific knowledge, and should be adjusted as our scientific knowledge improves.

Table 11: Summary of effectiveness and efficiency of Policy 9

Effectiveness

Recognition of national benefit

½√(indirect)

Manages effects of the grid on the environment

Manages effects of others on the grid

Impacts on council plans

Impacts on resource consents and designations

Efficiency

Environment

Neutral

Land owners

Neutral

Grid operator (Transpower)

Small benefit. Reduced transaction cost

Local government

Small benefit. Reduced transaction cost

Government

Small benefit

Consumers

Small benefit

Others / generators

Small benefit

Source: NZIER

b. Efficiency

For the environment and for land owners, Policy 9 has no environmental benefit or cost implications relative to the status quo (see Table 11). This conclusion is reached given the already relatively high level of acceptance and application of such standards.

For Transpower and local government, there is a possibility that transaction costs can be reduced since they can refer directly to clearly defined international standards.

This may have some benefit for government, consumers and others / generators since the use of clearly defined international standards could reduce uncertainty, local variability and enhance grid security.

5.2.12 Policy 10

In achieving the purpose of the Act, decision-makers must to the extent reasonably possible manage activities to avoid reverse sensitivity effects on the electricity transmission network and to ensure that operation, maintenance, upgrading, and development of the electricity transmission network is not compromised.

Overall, it is considered that Policy 10 is appropriate in relation to the objective. The reasons for this conclusion are outlined in the following two sections.

a. Effectiveness

Policy 10 is likely to be effective in relation to the objective, particularly to the first paragraph (indirectly) and the second bullet point (see Table 12). Policy 10 is directed at third-party activity – in proximity to transmission lines – reinforcing / recognising the importance of maintaining the integrity of the grid.

The policy will influence the full range of functions exercised by local authorities under the RMA and, by doing so, should ensure that local authorities have regard to the benefits of protecting the integrity of the grid.

b. Efficiency

Policy 10 is not likely to have an effect on the environment, since it does not change environmental outcomes from the status quo (see Table 12).

For land owners, Policy 10 could have major transaction and consequential cost implications since its implementation by local authorities is likely to explicitly require them to carefully consider their activities near transmission lines (relative to the status quo). Similar to Policies 1, 2 and 11, this may require land owners to change their behaviour and possibly curtail some activities.

For Transpower, there is potential for both consequential and transaction costs to decline since Policy 10 gives clear direction for protection of the grid from third-party activity.22 Over time, the clear direction of Policy 10 could increase awareness of what activities could compromise grid integrity relative to what occurs currently.

Table 12: Summary of effectiveness and efficiency of Policy 10

Effectiveness

Recognition of national benefit

√(indirect)

Manages effects of the grid on the environment

Manages effects of others on the grid

Impacts on council plans

Impacts on resource consents and designations

Efficiency

Environment

Neutral

Land owners

Large cost. Increased transaction and consequential costs

Grid operator (Transpower)

Large benefit. Decreased transaction and consequential costs

Local government

Medium cost. Net increase in transaction costs

Government

Small benefit

Consumers

Small benefit

Others / generators

Small benefit

Source: NZIER

While Policy 10 will potentially reduce costs for local councils when dealing with Transpower, it could add costs for their dealings with land owners. Despite the clear intent of Policy 10, land owners are likely to oppose plan changes which seek to give effect to the policy, and ongoing monitoring and enforcement of activities within the vicinity of transmission lines is likely to be required – particularly in the short to medium term. This is partly due to the lack of awareness of the importance of transmission, a situation that Policy 10 specifically addresses.

For government, consumers and others / generators, Policy 10 could have benefits since it will enhance grid security.

5.2.13 Policy 11

Local authorities must consult with the operator of the national grid, to identify an appropriate buffer corridor within which it can be expected that sensitive activities will generally not be provided for in plans and/or given resource consent. To assist local authorities to identify these corridors, they may request the operator of the national grid to provide local authorities with its medium to long-term plans for the alteration or upgrading of each affected section of the national grid (so as to facilitate the long-term strategic planning of the grid).

Overall, it is considered that Policy 11 is appropriate in relation to the objective. The reasons for this conclusion are outlined in the following two sections.

a. Effectiveness

Policy 11 will be effective in achieving the outcome sought in the objective since it addresses its first paragraph and the second bullet point (Table 13). Policy 11 is directed at third-party activity – within an appropriate buffer corridor of transmission lines. This reinforces and recognises the importance of the need to maintain the integrity of the grid.

The policy is directive and will influence the full range of functions exercised by local authorities under the RMA and, by doing so, should ensure that local authorities have regard to the benefits of maintaining the integrity of the national grid. One point of concern is the ability of Transpower to provide local councils with long-term plans. While investments made by Transpower are long-term in nature, the plans can change relatively quickly. This could be a point of uncertainty.

Policy 11 will have an impact on council plans since it specifically mentions the grid operator providing its development plans to councils, so that they can assist in transmission corridor planning.

b. Efficiency

Policy 11 may have some environmental benefit because it is specifically aimed at preventing activities that may harm those who are engaged in those activities (see Table 13).

For land owners, Policy 11 will increase transaction and consequential costs since it explicitly requires them to carefully consider their activities within a buffer corridor. This could not only increase transaction costs with councils (since they will seek further clarification and even challenge the intent of Policy 11) but also it could entail consequential costs as land owners have to modify or even stop activities in the buffer corridor.

For Transpower, there is potential for both consequential and transaction costs to decline significantly, since Policy 11 gives clear direction for protection of the grid from third-party activity in the buffer corridor. Transaction costs (in the form of advocacy to councils) and consequential costs (caused by third parties compromising the network) may be substantially reduced.

Table 13: Summary of effectiveness and efficiency of Policy 11

Effectiveness

Recognition of national benefit

√(indirect)

Manages effects of the grid on the environment

Manages effects of others on the grid

Impacts on council plans

Impacts on resource consents and designations

Efficiency

Environment

Small benefit

Land owners

Large cost. Increased consequential and transaction costs

Grid operator (Transpower)

Large benefit. Decreased consequential and transaction costs

Local government

Medium cost. Net increase in transaction costs

Government

Small benefit

Consumers

Small benefit

Others / generators

Small benefit

Source: NZIER

Policy 11 will potentially increase costs for local councils since they will have to deal with, and modify, land owner activities within a buffer corridor. While transactions costs in dealing with Transpower could reduce, the corresponding increase in costs of dealing with land owners could be large. How quickly land owners adapt to Policy 11 will have major implications for ongoing costs associated with the NPS. Equally, how quickly all parties reach an ‘accepted’ position on the appropriate width of the buffer and of which activities should be controlled within it, will also have major implications for the costs of the policy.

Government, consumers and others / generators are likely to benefit from Policy 11 since it will improve efficiency and security of grid operations.

5.2.14 Policy 12

Territorial authorities must identify the electricity transmission network on their relevant planning maps whether or not the network is designated.

Overall, it is considered that Policy 12 is appropriate in relation to the objective. The reasons for this conclusion are outlined in the following two sections.

a. Effectiveness

Policy 12 will be effective in achieving the outcome sought in the objective since it addresses the first paragraph and the second bullet point (see Table 14). Policy 12 is directed at councils and land owners to ensure that they take account of the importance of the national grid and ensure third-party activities are compatible with grid operations.

Policy 12 will impact on district plans and will have an indirect effect on resource consents (and designations) associated with both transmission activities and, in particular, third-party activities since councils will be more aware of where the transmission corridors are located.

b. Efficiency

Policy 12 is unlikely to have an impact on the environment or land owner costs. It may result in a small decrease in transaction costs for Transpower since councils are directed to include the transmission lines on their plans. They should consequently be well aware of where the transmission lines are located in their district, and take this into account within their resource consent decision-making process. Both outcomes should have a small benefit for Transpower in terms of reduced advocacy (transaction) costs (Table 14).

Councils will face transaction costs associated with the inclusion of the transmission lines in their plans.

Very small benefits (in terms of transmission line security) are expected.

Table 14: Summary of effectiveness and efficiency of Policy 12

Effectiveness

Recognition of national benefit

√(indirect)

Manages effects of the grid on the environment

Manages effects of others on the grid

Impacts on council plans

Impacts on resource consents and designations

½√

Efficiency

Environment

Neutral

Land owners

Neutral

Grid operator (Transpower)

Small benefit. Small decrease in transaction costs

Local government

Small cost. Increase in transaction costs

Government

Very small benefit

Consumers

Very small benefit

Others / generators

Very small benefit

Source: NZIER

5.2.15 Policy 13

Decision-makers must recognise that the designation process can facilitate long-term planning for the development, operation and maintenance of electricity transmission infrastructure.

Policy 13 may be appropriate as part of a wider package of policies, however, on its own, it states the status quo. Therefore, for each of the affected parties there is no difference from the status quo.

5.2.16 Policy 14

Regional councils must include objectives, policies and methods to facilitate long-term planning for investment in transmission infrastructure and its integration with land uses.

Policy 14 is similar to Policy 13 and could be considered appropriate with a wider package of policies. It is very similar to the status quo apart from the following points:

  • there are potential costs for land owners if land is subject to restrictions because it may be used for transmission lines

  • a minor benefit might accrue to Transpower if plans for transmission lines are carried through

  • there will be an increase in transaction costs for regional councils because they have to implement the policy in their plans.

It should also be noted that if land is earmarked for transmission lines, the opportunity costs associated with that land increase, the longer the land is subject to restrictions.

The effects of this policy are difficult to ascertain because it is specifically directed at regional councils which are primarily concerned with effects on resources other than land and land uses. The methods that local government can use to facilitate long-term planning for investment in transmission fall more in the ambit of territorial authorities than regional councils.

5.3 Summary of policies and effect on the Objective

This section considers the overall effect and appropriateness of the policies in relation to the objective. A summary of the policies’ effectiveness (Table 15) and efficiency (Table 16), and the risks associated with them is set out below.

Based on these considerations, it is concluded that the policies represent the most appropriate means of achieving the objective of the NPS. In particular, it is considered that policies will be effective and efficient in achieving the objective, and that while there is some risk associated with uncertainties, this will be mitigated through the established processes for the implementation of the NPS.

a. Effectiveness

Table 15 summarises policy effectiveness by placing ticks in the boxes where the policies appropriately deal with one or more of the three key areas of the objective and, also, whether or not the policies will have an effect on (1) council plans and (2) resource consents and designations. Also gauged and noted are the strengths of policy effectiveness (some boxes have ½ a tick) and whether the effect is indirect or not.

Table 15: Summary of effectiveness

Policy Elements of the objective Effect on

Recognition of national benefit

Manages effects of the grid on the environment

Manages effects of others on the grid

Impacts on council plans

Impacts on resource consents and designations

1

½√

2

½√

3

√ (indirect)

½√

4

5

6

7

√(indirect)

8

√(indirect)

9

½√ (indirect)

10

√(indirect)

11

√(indirect)

12

√(indirect)

½√

13

½√

½√

14

½√

½√ (indirect)

Source: NZIER

Notwithstanding specific comments made earlier regarding individual policies, it is considered that, overall, the policies will be effective in achieving the objective. In particular, it is noted that all three key elements of the scope of the objective are well addressed in the policies. Specifically, the national benefits of transmission are addressed by Policies 1, 2 and 3, adverse effects of transmission on the environment by Policies 7, 8 and 9, and managing the effects of others on the grid by Policies 10 and 11.

It is noted that the objective seeks to manage the adverse environmental effects of the grid generally, while the policies only address specifically identified effects. This difference is unlikely to undermine the effectiveness of the policies as the specific effects identified are considered to be the most significant potential effects of the grid.

With regard to the approaches of the policies included in the NPS, it is considered that policies will effectively influence both plan / policy statement decisions and those related to resource consents / notices of requirements.

b. Efficiency

Benefits

In regard to the efficiency of the policies in relation to the objective, there is a potential net benefit of approximately $3.0 million (Table 16). It is of note that the costs associated with the policies are substantial, immediate and mainly occur in the short term to medium term as councils and land owners become familiar with the regulations associated with the NPS (first 10 years). The benefits, while being more substantial, last over the lifetime of the transmission assets – although they do taper off towards the end of the 30-year period.

It is important to note that the size of the benefits / costs is highly dependent on the attitude of land owners and councils to the NPS. Transaction costs represent friction in the move to a new policy and can have an important bearing on whether policies are efficient.

While, on their own, some policies may generate costs to the environment, overall, there will be a small net benefit since adequate protection has been built in to safeguard and even improve environmental outcomes, particularly in Policies 4, 6, 7 and 8.

Transpower will benefit most from the introduction of the NPS. The benefit to the nation of national transmission is recognised (Policies 1, 2 and 3), while activities of third parties around transmission lines are restricted (Policies 10 and 11). The restriction of third-party activity is likely to have significant benefits for Transpower and accounts for the bulk of its approximate $10.0 million benefit.

Government, consumers and others / generators are also likely to experience a small benefit since security of electricity supply will be enhanced with the NPS. This benefit has not been quantified. Existing generators may benefit from insecurity of supply, as this enables higher prices and cost generation to be used, but new generators (especially renewables) should benefit from more timely grid connections to the market.

Costs

The main costs will fall on land owners and councils. Local councils will face substantial costs associated with the NPS. They will have to become familiar with its intent, and explain its provisions, despite the likely drop in transaction costs with Transpower. This will be difficult in the short term because it requires a behavioural change from land owners who potentially will be against the introduction of the NPS. Council costs are potentially $4.0 million, with the main costs being associated with plan changes, consenting around third-party issues and appeals.

Land owners will also experience major costs because they will be expected to change their behaviour (and economic activity) around transmission lines. Their losses will be consequential costs (associated with changing or curtailing their behaviour / activities) and transaction costs associated with dealing with councils that will enforce changes in activity / behaviour (possibly through the consenting process). Potentially, the costs to land owners will be approximately $2.7 million.

The costs to land owners is mitigated somewhat because the land surrounding transmission lines is valued less than land nearby. The lower price of land, particularly in urban areas, means that under the status quo the market has already priced in the perceived disadvantages or constraints on the use of that land. The cost to land owners identified above is therefore only the additional land value that will be lost as a result of the NPS further tightening constraints on land use and value.

Table 16: Summary of costs and benefits

Group / resource Explanation Cost / benefit

Benefits

Environment

Potentially a small benefit. Safeguards in place that reduce risk of substantial environmental losses, particularly from policies

Potential benefits cannot be properly costed, but will be small

Grid operator (Transpower)

Large benefits because of NPS guidance, particularly for third-party activities

Potential benefits of $10.0 million

Government

Some benefits will accrue to government, through security of supply and as owner of Transpower and claimant on its profits

Potential benefits cannot be properly costed, but will be small

Consumers

Some benefit from increased security of supply

Potential benefits cannot be properly costed, but will be small

Others / generators

Some benefit from more timely connection and increased security of supply

Potential benefits cannot be properly costed, but will be small

Costs

Local government

Increase in costs, particularly for those who have to change their plans because of the NPS. There will be increases in transaction costs with land owners. Also there will be Environment Court costs

Potential costs of $4.0 million

Land owners

Major costs on some land owners. The shift in policy / regulations means that all face transaction costs and some will be required to change behaviour around transmission lines. The costs will mainly fall in the short term

Potential costs of $2.7 million

Government

Minor costs associated with managing the transition process

Potential costs of $0.16 million

Net result

 

Potential net benefit of approximately $3.0 million

Source: NZIER

c. Risk of acting and areas of uncertainty

Section 32(4)(b) of the RMA requires an evaluation to take account of the risk of acting or not acting if there is uncertain or insufficient information about the subject matter.

Throughout the discussion above, four key areas of uncertainty or limited information have been identified. These relate to:

  • how local authorities will give effect to the NPS, and how land owners will respond, ie, in several instances, local authorities would retain significant discretion in relation to how they give effect to the NPS in its current form, and if land owners resist the introduction of the NPS by taking large numbers of cases to the Environment Court, then the costs to all parties will increase
  • the potential costs to third parties from the implementation of Policy 11 for both land owners and councils
  • the uncertainty of some of the definitions, such as ‘minor upgrades’ and ‘operational requirements’, since they have a bearing on how the costs and benefits fall
  • a detailed assessment of the environmental effects associated with electricity transmission, including the identification of appropriate and practical mitigation methods.

Each of these points presents a risk in relation to the implementation of an NPS on electricity transmission.

In relation to points two to four, it is considered that these areas of uncertainty and limited information do not undermine the appropriateness of the policies. In particular, it is noted that while transaction costs will be high initially as accepted methods of implementing the NPS are ‘tested’, the costs associated with uncertainties in the wording of the policies will reduce significantly thereafter. Equally, in relation to potential risks associated with the lack of a detailed environmental effects assessment, it is noted that councils will be required to consider environmental effects when setting policies, rules and standards in their plans. It is therefore considered that any limitations of information will be overcome by the detailed and locality-specific considerations undertaken by local councils.

d. Risk / uncertainty associated with the implementation of the NPS

It is considered that how council’s implement the NPS, and how land owners respond (objective’s first bullet), has the greatest potential to affect the efficiency of the NPS. Three scenarios are possible. The central scenario (preferred) is shown in Figure 1.

Figure 1: Central scenario: costs and benefits of the NPS

In this scenario, there is a net benefit to the nation since Transpower’s benefits outweigh costs to land owners and councils (by $3.0 million).

In a more favourable scenario shown in Figure 2, there could be a relatively small loss to councils if land owners comply with, and do not challenge, the implementation of the NPS. Further, over the life of the grid, particularly in the medium to long term, transaction costs with both Transpower and land owners reduce. Potentially, the net benefits could rise $9.0 million.

Figure 2: Favourable scenario: costs and benefits of the NPS

However, if land owners and councils react in a negative way towards the NPS and challenge its intent, costs could be large for land owners and councils. Not only will their direct and transaction costs increase, but Transpower’s benefits will also reduce because of the extra resources needed to ensure the intent of the NPS is followed through. Potentially, this could erode all of the benefits of the NPS.

Figure 3: Unfavourable scenario: costs and benefits of the NPS

It is considered that the first scenario is the most likely given that the impact of Transpower, councils and land owners on transaction costs should be mitigated by Environment Court decisions which in effect set ‘accepted’ approaches to the implementation of the NPS. As noted previously, while this is likely to mean high initial costs, such costs will diminish in the medium to long term.

There is also uncertainty over how large the costs and benefits are likely to be given the initial variation in provision for transmission activities across different local authorities. Transpower has indicated that a proportion of councils already make provision in their plans for all the things they seek, a proportion make provision for most things and a proportion make very little provision for transmission needs. The beneficial impact of the NPS will be greatest on the last group (the sparse providers), least for the first group, but in some cases the first group (the ample providers) may be required to incur costs for no appreciable benefit for the grid or the surrounding environment.


16  NZIER (2006), Transmission Line Evaluation and Economic Appraisal: Evaluation of proposed National Policy Statement on Electricity Transmission. Report to Ministry for the Environment, 20 October 2006.

17  Sensitive activities includes schools, residential buildings and hospitals.

18  Idem

19  Idem

20  ICNIRP means International Commission on Non-Ionising Radiation Protection. Guidelines for limiting exposure to time varying electric magnetic and electromagnetic fields (up to 300 GHz). HealthPhysics, 1998, 74(4): 494–522.

21  WHO means World Health Organization monograph Environmental Health Criteria, No 328, June 2007.

22  Transpower spends approximately $5.5 million per year on enforcing third-party requirements.