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6 Conclusions

This report provides an evaluation of the proposed National Policy Statement for Electricity Transmission in accordance with section 32 of the RMA. Because of the high-level guidance given by the proposed NPS, it is not feasible to quantify its costs and benefits with precision. However, there are certain benefits (largely in the form of costs avoided) and costs that can be expected to arise. These can be summarised as follows.

  • Because an NPS should be instrumental in producing rules and policies more amenable to transmission requirements, there should be some reduction in the transaction costs for Transpower in interpreting plan provisions, determining what they require, and lobbying for the alteration of inappropriate rules. In the longer term, the NPS should result in operational cost savings by reducing conflicts between transmission and other activities (eg, line shorting, supply interruption, negotiations over access). It could also reduce the incidence of reverse sensitivity that can lead to substantial costs for the transmission system.
  • Local government would incur implementation costs, which, across 73 local authorities and 12 regional councils, could accumulate to a large one-off cost if plans need to be specifically adjusted to accommodate the NPS. However, if allowed to roll over until the next plan review date, there would be a low marginal cost.
  • The Government would incur some implementation costs in drawing up the NPS and assisting in its adoption by local authorities.
  • Some landowners adjoining the transmission network may incur small costs and benefits to the extent that their activities are curtailed and property values affected.
  • Electricity consumers should generally receive some benefit from more timely maintenance and upgrade activity because of:
    • reduction in the (already low) probability of transmission system failure caused by RMA process-induced delay
    • reduction in transaction costs of Transpower's plan advocacy work, to the extent that this is passed on to consumers through the average charges for transmission (the balance remains a cost for Transpower).

The evaluation of the status quo discusses the first three issues identified in the Reference Group report:

  • the national benefits of transmission
  • the effects of activities on the transmission network
  • the efficient operation and maintenance of the existing network.

The evaluation confirms that these are undoubtedly resource management issues that warrant considering alternatives to the status quo. However, in relation to the adverse effects of the transmission network, the conclusion is not as clear, because most council plans already cover these issues at length. Inclusion of provisions that cover these matters might be warranted to ensure an internal balance within the NPS itself. Because the NPS only gives broad guidance, it may not alleviate the variations across districts that are part of the cost of the current status quo.

The costs of the status quo are likely to escalate as demands on the electricity system grow and require further upgrades and extensions to the transmission network. Pressures arise from the growth in population, economic activity and demand for electricity, the need to find new sources of electricity generation and connect them to their markets, and the increased interest in renewable generation arising from international commitments over greenhouse gas emissions. The benefits of ironing out any unnecessary impediments and costs from the environmental management issues around the transmission grid will increase in future years.

The benefits of the NPS stem largely from cost savings for Transpower, which should avoid some of its current costs of plan advocacy and, in the longer term, reduce conflicts with other activities. Some of this benefit may be passed on to electricity consumers as a reduction in Transpower charges and improvements in network security and operation.

There could also be benefits nationally if grid capacity improvements facilitated by the NPS encourage the development of more renewable energy generation, subject to the grid improvement itself passing a benefit−cost test. Costs are likely to stem largely from costs to local governments in changing plans to recognise the NPS (which may be very small if simply a marginal cost on their next plan review), to central government in implementing the NPS, and to landowners adjoining the transmission network, who may have their activities curtailed by NPS policies.

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