1.1 Overview and background
Electricity is vital for modern lifestyles, commerce and industry. In many of its applications there is no substitute. Demand for electricity is increasing with population growth, rising incomes and new technologies powered by electricity.
The electrical power infrastructure comprises three systems: generation, transmission and distribution. The subject of this report is electricity transmission or the ‘national grid’, which supplies and transfers electricity around the country.
Debate on how best to develop major infrastructure projects is not new. Major infrastructure is typically resource intensive, performs vital services and is highly noticeable. Since the 1950s and 1960s – when the bulk of the electricity transmission network was established – environmental values have changed. The passing of the Resource Management Act (RMA) in 1991 was instrumental in altering the debate, thinking and responses relating to the imperative to sustainably manage the environment. Making an effort to strike a balance between social, cultural, ecological and economic values has now become the norm for most people.
This process is complicated by the increasing demand for electricity. Most recent electricity demand forecasts are based on the Electricity Commission’s national demand forecast from the Initial Statement of Opportunities dated July 2005.2 This forecasts that national electricity demand will grow on average at 2.3 percent over the next 10 years. This means that additional network investments (including new transmission lines and/or upgrading of existing lines) will be required.
Transpower has, until 2010, committed to a significant number of projects involving incremental enhancements, such as the thermal upgrade of several existing transmission lines, and installation of static and dynamic voltage support.
The projected growth in electricity demand gives Transpower strong incentives (1) to increase their existing network capacity and (2) to build new lines. This is necessary, since supply of electricity must run in front of demand to meet electricity requirements. Therefore, Transpower places strong emphasis on increasing the capacity of the existing network by up-rating, duplexing and triplexing lines, and adding additional circuits.
Responding to concerns about timely upgrade of transmission, the government established a reference group to advise on the feasibility and merits of a national policy statement (NPS) and/or national environmental standards (NESs)3 to address issues associated with the management of electricity transmission under the RMA.
Following public consultation, the Reference Group4 produced a report entitled: The Merits and Potential Scope of National Guidance on the Management of Electricity Transmission under the RMA (April 2006).5 The Reference Group’s report identified three main electricity transmission policy areas that national guidance (an NPS and/or national environmental standards) could address:
the positive effects of transmission
managing adverse effects on transmission
managing adverse effects of transmission.
The Reference Group considered that “there are likely to be net benefits” in developing an NPS.
Demands on the electricity system are growing. The need for upgrades and extensions of the transmission network are likely to escalate in future, as will the costs of the current situation or ‘status quo’ (ie, no action). Therefore, to an extent, national guidance would anticipate this development.
The NPS is intended to provide national direction on the sustainable management of the electricity transmission network, and in particular to raise the status of electricity transmission to one of national significance when considering resource management proposals.
This NPS evaluation is based on the report from the independent Board of Inquiry,6 which undertook public consultation and public hearings. The evaluation examines the recommended changes made by the Board of Inquiry, and evaluates the effect of these changes in terms of their efficiency and effectiveness in achieving the NPS objective.
Despite the government’s attempts to draw attention to and debate the merits of ensuring that the benefits of transmission receive national recognition, the development of new lines and the route selection process has hardened the attitudes of councils and land owners who are opposed to this development. Therefore, the development of new lines is likely to face opposition with or without an NPS. This makes it difficult to ascertain the status quo costs since these are higher than they were five years ago. This is solely due to the hardening of attitudes.
1.2 Section 32 and methodology
Section 32(3) of the RMA requires that an evaluation must examine:
- the extent to which each objective is the most appropriate way to achieve the purpose of this Act; and
- whether, having regard to their efficiency and effectiveness, the policies, rules, or other methods are the most appropriate for achieving the objectives.
Section 32(4) of the RMA requires that the evaluation take account of:
- the benefits and costs of policies, rules or other methods; and
- the risk of acting or not acting if there is uncertain or insufficient information about the subject matter of the policies, rules, or other methods.
Section 32 of the RMA does not explicitly require an evaluation of whether the NPS is ‘desirable’. This assessment is required separately under section 45 of the RMA. In completing an evaluation in accordance with section 32 there is, however, an implicit requirement to assess alternative approaches to the NPS.
A clear and existing alternative to the NPS is the status quo, which therefore serves as the baseline for this evaluation. The relevance of the non-RMA elements, and their relevance to costs and benefits of the RMA elements, are considered as part of this evaluation.
In considering the appropriateness of the objective of the NPS, consideration is given to:
the purpose of the objective, which is to state the outcome sought from the resolution of a resource management issue
whether, through the resolution of an identified resource management issue, the objective will help achieve the purpose of the RMA, being the promotion of the sustainable management of natural and physical resources.
Having considered the appropriateness of the objective, the related policies are then evaluated, including the assessment of alternative approaches to achieving the objective. In evaluating the policies, consideration is given to:
the costs and benefits of each policy, the risk of acting or not acting where there is insufficient information or uncertainties and, having considered these matters, how efficient the policy would be in achieving the objective
how effective, or successful, the policies would be in achieving the objective and thereby resolving the relevant issue.
Note that 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.
2 The latest Statement of Opportunity was due to be released in late 2007, but has been delayed.
3 One or more NESs may also be developed in addition to the NPS to add certainty on some resource management matters relating to the electricity transmission network.
4 The Electricity Transmission Reference Group comprised representatives of agencies, industries and organisations with a specific interest in electricity transmission. See the Glossary for further detail.
6 A board of inquiry is an independent body established by the Minister, under section 47 of the RMA, to inquire into and report on a proposed NPS.