8. The Positive Effects of Electricity Transmission
8.1 Objective: Recognising Positive Effects
The NPS may state objectives in respect of each policy, or in respect of a group of policies.
An objective should articulate the outcome sought from the resolution of the identified issue. An objective could take one of several approaches.
First, it could relate to the aim of modifying, or supporting the existing approach taken by decision-makers. Such an objective might simply state:
(a) To ensure that when making an overall judgment about the acceptability of a transmission project, appropriate regard is had to the national benefits of transmission.
or
(b) To ensure that electricity transmission projects are assessed having regard to the full range of effects both positive and negative.
Alternatively, it could focus on the outcome sought. This might take the following form:
(c) The sustainable management of the national electricity transmission network as a physical resource including its efficient operation, maintenance, upgrading and further development, where that provides benefit to people and communities and where all practicable measures are taken to avoid, remedy or mitigate adverse environmental effects.
This later objective would be relevant to a number of the policies discussed in the following sections.
8.2 Evaluation of Appropriateness
An objective will be appropriate if it promotes the purpose of the Act or a particular aspect of that purpose (without undermining the overall purpose). It is noteworthy that in Genesis Energy v Franklin District Council (2005 NZRMA 541) the Environment Court found that "electricity is a vital resource for New Zealand. There can be no sustainable management of natural and physical resources without energy of which electricity is a major component".
In that sense, all the options identified above may be argued to be appropriate. Furthermore
- Option (a) is clearly consistent with decisions of the Environment Court that have taken an "overall judgement approach" to determining the acceptability of proposal, and in so doing have had regard to national (and international benefits).57
- Option (b) is appropriate because it simply offers support for the definition of "effect" which specifically provides for positive and negative effects to be considered (see section 3 of the RMA).
- Option (c) is appropriate because it recognises that the transmission network is a physical resource in that it is a structure (being, in turn, defined as any building, device, or other facility made by people and which is fixed to land), and therefore is within the definition of physical resource set out in section 2 of the RMA.
8.3 Policy: According Nationally Significant Status
The above objective(s) could be promoted by giving transmission a particular status. In previous cases, often involving infrastructure projects, the Environment Court has recognised that some activities are nationally significant, presumably because of the contribution they make to national wealth and welfare. The NPS might ensure that the electricity transmission network enjoyed similar status. Some options to achieve this would include policies that state:
(a) District and regional plans should recognise the transmission network including lines, structures and substations as a nationally significant activity.
or
(b) District and regional plans should recognise the transmission network including lines, structures and substations as a physical resource of national significance.
8.4 Evaluation of Appropriateness
The above policies focus on what district and regional plans should contain. They aim to promote district and regional plan provisions that:
- specifically refer to transmission (in recognition that none currently do so); and
- provide transmission with a status above other activities controlled by plans that do not have national significance.
The actual effect of the policy is impossible to predict with absolute certainly, since much is dependent on how it is interpreted and applied by local authorities.58 "Recognising" transmission could take many different forms. This recognition could be manifest as:
- Rules in plans that facilitate transmission to a greater degree than some other activities with like effects (being those activities that are not nationally significant). For example, the policy might provide grounds for a plan to identify an activity associated with transmission as discretionary when it might otherwise be non-complying. Or it might set performance standards at levels that are known to be achievable using current transmission project methods and technologies; and/or
- Objectives and policies in plans that acknowledge the national significance of the transmission projects and which are taken into account in designation and resource consent decision-making processes. These could conceivably result in applications for consent being approved when they might otherwise be declined. Or, arguably more likely, it might result in local authority decisions (that would have been made anyway) being more easily defended if challenged on appeal.
In short, while the policy does not specify how, or to what extent, transmission projects are to be recognised in planning instruments, it certainly would provide support for those local authorities who choose to take a more facilitative approach towards transmission than has been taken to date. In that sense, both option (a) and (b) would have to be regarded as potentially effective in achieving the objective.
8.4.1 Costs of a Policy on Nationally Significance
Public Compliance Costs
Plans and policies would need to be changed to give effect to the policy. As noted earlier, no plans currently recognise electricity transmission so it is a reasonable assumption that all 71 district plans, 64 regional plans and 16 regional policy statements would need to be changed. The fiscal cost of this for local authorities would depend on several factors. Most importantly, cost would depend on what transitional period for introducing the NPS is allowed. Many local authorities are now contemplating preparing second generation plans. If they were able to "give effect to" the NPS policies as part of planned reviews, the marginal cost of compliance would be low. If changes were required to existing plans outside of planned reviews, costs could be high (perhaps up to $50,000 per local authority59).
Environmental and Community Costs
As noted above, the promotion of the policies outlined may mean that transmission projects:
- proceed through the regulatory process more easily than they otherwise might (involving potentially less environmental scrutiny); or
- be approved where they might otherwise not succeed; or
- be more easily defended on appeal to the Courts.
The logical inference of at least outcomes (i) and (ii) is that the environment might bear some cost that it would otherwise not. On the other hand, it is possible that none of these scenarios eventuates.
Evaluating these policies in the abstract (that is, not in the context of a particular transmission project) it is impossible to predict the nature or extent of any environmental cost. However, it is likely that additional cost (if any) would be marginal and highly localised when viewed at the national scale. That assertion is based on the presumption that even without an NPS, transmission projects (particularly works on existing lines) would almost certainly proceed albeit the process and information requirements might be more onerous.
Other Costs
The introduction of policies of the nature outlined above might well disrupt case law, if only because there would be an additional policy to consider in decision-making. In this respect option (b) might be argued to be more costly than option (a). The Courts have already recognised certain activities as having national significance (or of significance to "national sustainability") and taken them into account in making an overall judgement as to the acceptability of proposals.60 There is not the same level of case law supporting the recognition of structures as being nationally important physical resources.
8.4.2 Benefits of a Policy on National Significance
Private (Transpower) Transaction Costs
Transpower currently makes submissions on local authority plans and policies promoting the notion that transmission is nationally important and should be recognised in district and regional plans and policy statements. It appears at local authority plan hearings and, if necessary, defends its submissions at Environment Court hearings (or in pre-hearing processes).
A national policy such as that described could significantly reduce the need for Transpower to continue with that programme at the same level over the long-term.
Private Compliance Costs
Some of the key benefits of the policy have already been referred to. These are, principally, that transmission projects could proceed through the RMA's regulatory process more easily than they otherwise might. This might be because:
- the provisions of local and regional policies and plans should better reflect the national significance of transmission;
- a more certain policy environment allows for more rapid and more consistent assessment and decision-making;
- projects that might be marginal on environmental grounds might succeed when the national importance is explicitly considered; and
- decisions in favour of transmission projects might be more easily defended at the Environment Court, with the result that fewer decisions are challenged (appealed); and/or that those that are appealed are more likely to be upheld.
Through any or all these ways, Transpower could experience reduced compliance costs. Of course, the extent to which these benefits might accrue is impossible to determine. Much discretion remains with individual local authorities and the Courts.
Other Benefits - Improved Economic, Social and Cultural Outcomes
While it would be possible to identify, with some accuracy, the benefits of a new transmission line or an upgrade to an existing line in terms of the economic, social and environmental advantages gained, it would be misleading to suggest that such benefits would necessarily result from the policy suggested. The benefits are likely to be project-specific, and at the margin for the same reasons that the costs are likely to be at the margin.
The policy can be said to be efficient if the benefits outweigh the costs. While it is not possible to undertake that analysis in any quantitative sense with the information available, the Reference Group is satisfied that the assessed levels of environmental and compliance costs are likely to be outweighed by the increased certainty in the policy framework and fuller consideration of the benefits and costs of transmission.
8.5 Policy: Specification of Positive Effects
The NPS could also provide direction to ensure that when making an overall judgement about the merits of electricity transmission projects, and whether those projects promote the purpose of the Act, decision-makers take into account the positive effects that can be expected from a project. The policy might provide guidance to the effect that:
Local authorities should, when considering any consent application or notice of requirement in relation to a transmission project, have regard to the social (including health) and economic benefits associated with the end use of electricity by taking into account to the extent to which the project provides any of the following positive effects:
- improved supply of electricity;
- reduced risk of interruption to supply;
- lower cost of electricity than otherwise;
- reduced loss of energy in transmission (including the facilitation of new or existing renewable electricity generation); and
- lower overall environmental costs from the generation of electricity than would otherwise be the case).
8.6 Evaluation of Appropriateness
The Reference Group does not believe that it would be either possible, or appropriate, for the NPS to suggest that certain effects will necessarily occur or that certain positive effects should outweigh negative effects. The intent of the policy outlined is simply to ensure that the full range of positive effects is considered in the decision-making mix.
It is anticipated that a policy such as that suggested above, would allow Transpower to submit evidence on the extent to which the benefits listed will result from the project proposed. It will also allow other parties to challenge that evidence.
The policy also legitimises an approach to assessing effects that looks beyond the direct environmental impacts of a project on a particular site, or arising directly from the use of that site. It anticipates considering the sectoral and strategic impacts of allowing the project. This may mean, for example, explicit consideration of the net environmental impacts from the electricity sector as the result of a particular proposal.
The policy is effective in achieving the objective in the sense that:
- it applies directly to the consideration of resource consents and notices of requirement. It does not rely on being translated into a plan or policy statement; and
- local authorities must give effect to the policy and can only do this by receiving evidence and argument and weighing that information accordingly. If decision-makers choose to ignore relevant information it could be challenged and remedied on appeal.
In some instances it may be difficult to quantify benefits. On such occasions, it may be difficult for local authorities and the courts to place weight on arguments about the benefits of transmission projects.
8.6.1 The Costs of a Policy on Benefits
Public Compliance Costs
Few plans currently give explicit recognition to either general or specific benefits of transmission and most, if not all, may require change to give effect to a policy centred on positive effects of transmission. The comments made in section 8.4 apply.
Private Compliance Costs
The policy might encourage (and may even require) Transpower to provide a greater volume of information to be assessed and considered by decision-makers and other parties. This could:
- impose additional costs on Transpower;
- impose additional costs on local authorities and other parties who must read and evaluate the information supplied; and
- cause delay in processing of applications and in hearing evidence.
The magnitude of these additional costs for Transpower is difficult to determine, but is likely to be low. Although the relevance of information on benefits may currently be a matter of debate, Transpower already gathers the sort of information required by the policy for the purpose of preparing its business case, and for securing Electricity Commission approval for the project. Furthermore, Transpower already routinely provides information on the benefits of projects to accompany applications and notices of requirement.
The costs on local authorities and submitters might well be higher since information on benefits is not always challenged in decision-making processes at present. That would likely change should the suggested policy be adopted. It may well be that local authorities would consider it necessary to seek expert review of information provided to verify the claims made. The cost of such expert advice could (and almost certainly would) be passed on to Transpower as the applicant.
The cost of expert review would vary depending on the scale of the project and the purported positive effects. It would involve someone with expertise in the electricity sector and/or economic analysis. Costs for large projects could be in the order of $10,000 to $20,000. They could be expected to be significantly lower for more minor projects.
Environmental Costs
The policy raises fundamental issues about the purpose of the RMA and, in particular, the relevance of positive effects in decision-making.
Although section 3 of the RMA defines effect to include "any positive or negative effect", the extent to which positive effects should be taken in to account has been an on-going debate. This is principally because taking into account both positive and negative effects can be seen as suggesting that these should be weighed, or balanced, against each other and the decision made accordingly. That would be to adopt an interpretation of the purpose of the RMA that would conflict with what has become known as the environmental bottom-line approach to section 5 (the Purpose) of the Act. Essentially, that approach advocates that the environment should not be traded away simply because a particular activity might yield an economic benefit. It relies on the notion that there is a "bottom-line" environmental quality that can be defined, and must be defended if sustainable management of natural and physical resources is to be promoted.
If that view is adopted in this context, a cost of the suggested policy would be that it does imply that a lower level of environmental quality should be acceptable if sufficient positive effects can be shown to accrue.
In short, the policy could be argued to encourage a greater trading away of the environment. And the local environment might, therefore, be expected to bear a greater cost than might otherwise occur.
It should be noted, however, that there is no question as to the legitimacy of the policy. Indeed, the environmental bottom-line approach to the purpose of the Act is by no means unanimously agreed. In more recent Court decisions the environmental bottom-line approach has given way in favour of an "overall judgement" approach where decision-makers are to give greater weight to the benefits of activities in considering the acceptability of their environmental effects.61
That approach recognises that sustainable management of resources requires a broader assessment of effects.
As noted above, this will include taking account of environmental consequences at the national or sectoral scale which might conceivably be positive,62 even though there are localised adverse effects from transmission lines and associated structures. In that sense, the net environmental cost might, overall, be insignificant.
8.6.2 Benefits of a Policy on Benefits
The benefits of the policy will be similar to those identified in respect of policy 8.3. Essentially, the policy could create more certainty around what is relevant to take into account. While it is doubtful that projects would be approved as a result of this policy that would otherwise not be approved, it may be that those decisions can be made and defended with greater certainty.
In addition, the policy should ensure that the wider strategic environmental benefits of transmission are taken into account and that might well better promote the purpose of the Act.
For these reasons, the Reference Group is satisfied that the benefits of the policy outweigh the costs, and it is regarded as efficient for that reason.
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