Appendix 3: Analysis of Option of Deeming All Existing Transmission Lines to Be Designated
1. Introduction
One option that has been identified to address a number of the issues identified in section 5 of this report is that of legislating to deem all existing transmission lines to be designated.
The effect of a designation is set out in section 4.3. In short it would (a) allow transmission to occur without a specific land use consent; (b) prevent any use of the designated corridor that would prevent or hinder transmission (without Transpower's written consent); and (c) allow the landowner to apply to the Environment Court for an order requiring Transpower to purchase or take an interest in the designated land.
This appendix provides an evaluation of the merits of this option.
2. The Option
At present there are no means by which a Minister or any other person can deem a designation to exist that has not proceeded through the process set out in sections 168-186 of the RMA.
The exact means by which designations could be deemed would likely require detailed legal consideration. However, in broad terms the option might involve either:
- A substantive amendment to the RMA deeming designations to exist as well as an amendment to the Act's regulation making powers set out in section 360 to enable the Minister to issue regulations specifying the detail of designations; or
- a special empowering Act.91
Either way the net result would be to deem a defined corridor beneath existing lines to be designated for electricity transmission purposes
3. The Benefits of the Deemed Designations
In some ways, this would be similar to extending, indefinitely, the transitional provisions that applied to transmission on the enactment of the RMA in 1991 (see section 4.3.4) although the effect of those provisions (and the benefit for Transpower) would be significantly extended.
The principal benefits for the transmission network that would accrue include:
- The existing lines and their operation and maintenance would be allowed as of right. They would not require land use consent or specific enabling provisions in district plans. This would occur on a nationally consistent basis.
- Section 176 of the RMA would apply, meaning that no activity (including subdivision) could be undertaken (without Transpower's written consent) within the designated area (corridor) that would prevent or hinder electricity transmission. This allows the effects on transmission lines arising from activities within the designated corridor to be managed using the enforcement mechanisms of the RMA.92
- The option would represent a strong legislative signal about the national importance of electricity transmission.
The principal benefit for landowners affected by pre-1988 lines is that once their land is designated, they would be entitled to apply to the Environment Court for an order requiring Transpower to take in interest in their land under the Public Works Act (see section 4.4.1).
The extent of this benefit would be difficult to assess, as section 185(3) of the RMA refers to the Environment Court making such an order when land is unable to be sold at a value that the land would have had if it had not been subject to the designation.93 Furthermore, subsection 185 (7) states that the amount of compensation paid shall be assessed as if the designation had not been created. Where lines already exist, the amount of "lost value" associated with the creation of a designation will obviously be less that if the lines did not already exist. In other words, where transmission lines already exist the marginal difference in value created with the imposition of a designation might not be great (depending on exactly what the designation allowed Transpower to do compared to what it may already lawfully do under the Electricity Act).
On the other hand, the imposition of a designation is associated with a general inability to use designated land in a way that might "prevent or hinder" transmission without the written consent of Transpower. Landowners are likely to regard this as substantially reducing value and expect some level of compensation.
4. Disadvantages of Deemed Designations
There are a number of downsides to the option of deeming designations. These are summarised as follows.
Potential Cost of the Requirement to Take an Interest in the Designated Land
Just as the potential requirement for Transpower to pay compensation to landowners is a benefit to landowners it would be a significant cost to Transpower and therefore to electricity consumers.
With over 17,000 km of pre-1988 lines there would be many thousands of landowners affected if designations were deemed to exist. Although there is some doubt about the loss in value (and therefore compensation payable) that would result, there can be little doubt that landowners' expectations would be high. If compensation was assessed at anything like that that would flow from a designation for a new line, there would be a major wealth transfer from electricity consumers to landowners. Such a wealth transfer would yield no economic benefit for New Zealand as a whole but would impose significant transaction costs (in terms of surveying, valuation, legal costs etc).
If compensation was assessed at levels significantly below that which would apply in respect of new lines landowners would likely be disappointed and protracted policy disputes and legal challenge could be expected.
The option, and the consequential compensation implications, would also raise difficult equity issues. For example, there would be issues with the windfall gains to landowners who purchased land subsequent to lines being built at a price that reflected the existing transmission line. Many properties will have changed hands since lines were initially built mostly in the 1950s and 1960s. The original landowner who may have borne the loss in value may be long gone. Similarly there would be issues associated with landowners who did receive compensation at the time lines were built (for example, in kind compensation such as access roads). It also raises the issue of whether a similar regime should be put in place for distribution lines and if not why not.
In short, the proposal would effectively reopen the policy debate that was considered at length by Parliament in 1992 and 2001 (where the decision was taken to draw a line between pre and post 1988 lines). It would do so with no prospect of enhancing overall economic welfare.
Loss of Participation Rights
Deeming designations for existing lines cuts across the usual rights that affected landowners and others have to participate in designation processes.94 There is nothing stopping Transpower designating existing lines now - no legislative change or regulation is necessary. It is simply that Transpower has chosen not to do so for pre-1988 lines. The appropriateness of providing Transpower with deemed designations when it could have sought designations as district plans were reviewed is questionable. Affected landowners would likely feel aggrieved that Transpower did not avail itself of the opportunity that always existed and that Transpower would (if the proposal proceeded) achieve the same end without public comment and other safeguards (such as appeal rights) available to the public.
Partial Management of Effects on Transmission
Designations would only affect what happens within the designated corridor. Many of the effects on transmission occur from activities that occur outside or adjacent to the easement corridor. This means that designations would only offer a partial solution to the problem of activities adversely affecting the transmission network.
Difficulty of Prescribing the Appropriate Scope of Designations
Deemed designations would have to specify the activity95that is permitted within the designation. This specification could take either:
- a blanket approach (i.e. simply allowing for "activities associated with electricity transmission"); or
- a blanket approach but with parameters of acceptability to reflect the existing level of use (e.g. "transmission activities provided that the line voltage shall not increase above the level the existed as at June 2006".)
- a line-specific approach with specification of the activity permitted for each specific line (e.g. "For the line x to y: electricity transmission using four conductors at voltages of 110 kV").
The difficulty in taking a blanket approach to deeming designations would be that there would be no control over the extent of works and upgrades that Transpower could undertake in the name of "electricity transmission" and adverse effects would not be appropriately managed.
Tailoring designations to individual lines would be possible in theory but hugely onerous in reality. Tailored designations would need to specify the exact location of the designated corridor (this may need to vary depending on topography, voltage, tower height), and the nature of the activities permitted including the extent of upgrading to be provided for. This in turn would involve assessing each line and potentially each section of line.
This could require long and detailed legislation/regulations. Such regulations would be difficult to produce and would introduce a level of prescription that is currently foreign to the RMA.
In short, the designation mechanism is designed to apply to particular projects in particular localities. It does not lend itself to use generically through deeming designations that would affect thousands of property holders without due regard to individual sites and circumstances.
5. Conclusion
On balance, having regard to the benefits and costs outlined above, the Reference Group considers that deemed designations would not be as effective or efficient as the other means discussed in Part 2 of this report.
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