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• Cost Sharing

• Infrastructure Development

• Utilities & Corridors

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• Summary of Submissions
• Discussion Paper
• 19 Feb 2007 Forum

Question: What problems have respondents experienced with cost sharing arrangements for utility work within the road corridor?

29 submissions responded to this question.

It was widely felt that inconsistent legislation creates inconsistent expectations, confusion, and unbudgeted costs arising. Specific cost sharing issues that were significant included:

• relocation and cost sharing;
• unreasonable conditions, especially undergrounding;
• cost breakdowns not provided, excessive costs, poor planning;
• betterment: one party inadvertently subsidising the other party's asset upgrade;
• paying to repair damage from works where RON conditions have not been adhered to; and
• works reduce the integrity and life expectancy of other assets, both road and utility. Hard to recover costs when damage becomes apparent long after work.

An issue that appeared throughout a number of RCA submissions was that of rentals. It was felt that the RCA buys land for road development and owns and maintains the roading asset with ratepayer/taxpayer money, however, utility legislation allows utilities to freeride on that ownership and locate utilities in that road corridor free of rental and make a profit. It was also felt that legislative inconsistency allows utilities to charge rentals to RCA or other utilities for locating additional assets in/on a utility's asset that is located in the road corridor.

Question: Is there good reason for the legislative differences for cost sharing arrangements?

16 submissions responded to this question. 15 answered NO. One respondent answered YES; suggesting that differences reflect the competing policy and practical considerations.

Question: Should the legislation be consistent?

33 submissions were received. 31 answered YES, the legislation should be consistent, while 2 answered NO.

Question: What solutions do respondents propose as providing the most balanced and effective outcome for resolving legislative inconsistency for cost sharing arrangements for utility work within the road corridor?

41 submissions responded to this question.

There was a strong desire for legislative consistency to resolve issues. There was also strong support for Partnering Agreements and Model Arrangements as means of resolving issues. While a number of different solutions were proposed, four key themes emerged as having significant support:

1. All legislation adopt Electricity/Gas Acts cost sharing provisions;
2. 50/50 cost sharing between RCA and Utilities as provided for in s54 Transit Act;
3. Causer Pays; and
4. Negotiation.

Causer pays was the most popular solution. There were suggestions that this should cover the full cost of works and relocation, the full cost for new assets, be less the cost of affected asset betterment, or include a discounting regime based on remaining economic life and/or asset improvement guidelines.

There were a number of solutions and variations on minor points suggested. The Ministry believes this requires a more in-depth review in association with stakeholders.

Question: What solutions do respondents propose for ensuring the fair apportionment of the true whole of life costs of utility works to the road asset?

23 submissions responded to this question.

There was agreement that a standard definition of "whole of life costs" is required. There was support for a working group to research and develop a formula, guidelines, and/or model arrangements for the fair and reasonable apportionment of whole of life costs. There was also support for the causer of works paying the full costs of works including whole of life cost apportionment.