2. The Status Quo

2.1 State of transmission lines in New Zealand

2.2 Need for managing national electricity grid

2.2.1 National importance

New Zealand’s current economic activity and future economic growth rely on a secure supply of energy, particularly electricity. The well-being of New Zealanders depends on a supply of affordable and sustainable energy to power their homes and businesses. Demand for electricity has been growing at 2 per cent per year, and is predicted to continue growing at 1.3 per cent per year in the future (Ministry of Economic Development, 2006). This is likely to place increasing pressure on the transmission network.

Investment to enhance the national grid infrastructure trebled in 2006 to over $300 million compared with an average expenditure of $100 million per annum over the last decade. Annual operating expenditure is forecast to continue to increase over the next decade (Transpower New Zealand Ltd, 2008). A proportionate level of increase in requirements for RMA approvals for maintenance and upgrading work can also be expected.

In February 2009 Transpower announced the decision to bring forward $50 million of maintenance work on the national grid. Planned work focuses on tower maintenance rather than initiating major new projects. The work is predominantly in rural New Zealand, and is nationwide (Transpower New Zealand Ltd, 2009).

For the foreseeable future new electricity generation is likely to be from medium- to large-scale generation, remote from where most of the electricity is used (the electricity demand centres). A robust grid to support renewable electricity supply is essential because the intermittent nature of renewable electricity resources puts more pressure on the grid.

Security of electricity supply at affordable prices relies on having a resilient national grid, but grid constraints could result in planned and unplanned interruptions to supply, higher electricity prices in some areas, and renewable energy projects being unable to access the grid. Building and maintaining a robust national grid in a sustainable manner requires ongoing maintenance to prevent equipment failure disrupting supply, as well as upgrading the capacity of existing lines to cope with increased pressure on the grid. This in turn requires:

• appropriate controls on the environmental effects of electricity transmission
• a framework of consent requirements that enables the grid operator to operate without unnecessary constraints or delays.

Electricity transmission is a linear meshed network. A single transmission line (circuit) can traverse hundreds of kilometres and pass through several districts. Work done to maintain or upgrade a transmission line is only effective if it can be carried out on the whole length of the line. A partial upgrade is ineffective because the capacity or reliability of the whole line is limited by the section not maintained or upgraded, like the weakest link in a chain.

An example of how a lack of maintenance can disrupt supply involved most of southern and central Auckland - including the central business district - losing power for between one and eight hours on Monday 12 June 2006. The blackout was caused by the failure of two corroded shackles during high wind. At an estimated cost of $20,000 per kW hour of lost load, the total cost of the blackout (based on Transpower’s records of lost load) was $70 million. Although the maintenance problem in this case was not the result of RMA constraints or delays, the example illustrates the potential economic cost of disruption to electricity supply through factors such as disruption to businesses, lost productivity and the cost of back-up generation.

2.2.2  Predicted level of transmission activities

As discussed above, electricity demand is predicted to grow on average by 1.3 per cent per year over the next 10 years. Additional network investments will therefore be required with or without the proposed NES. Investment in the maintenance and upgrade of the transmission network over the last decade has been low. Transpower’s capital expenditure on transmission lines is predicted to increase over the next 10 years from around $100 million to just over $380 million per annum. Up to 2010 Transpower has committed to a significant number of projects involving incremental enhancements, such as the thermal upgrade of a number of existing transmission lines.

Transpower places strong emphasis on increasing the capacity of the existing network by uprating, duplexing and triplexing lines and adding additional circuits. For the purpose of this analysis it is assumed that the increase in expenditure on the maintenance and upgrading of existing transmission lines will follow this general trend in expenditure, and that the level of activity increases linearly over a 10-year period to three times current levels. Given that the benefits of the NES in terms of reduced RMA costs are proportional to the increase in activity, and that the discounting method values benefits in early years of the analysis more than benefits in later years, this is a conservative assumption.

2.3 Controls over transmission lines

2.3.1 Resource Management Act 1991

The RMA sets the regulatory framework for resource management in New Zealand and provides for a range of policy instruments. The hierarchy of policy statements and plans under the RMA is set out in Figure 2. National policy statements, including the New Zealand Coastal Policy Statement, set out objectives and policies for matters of national significance that are relevant to achieving the purposes of the RMA but do not contain detailed rules.

Figure 1: Planning instruments under the RMA

Source: NZIER, 2007

This figure is a flowchart of Resource Management Act responsibilities.

2.3.2 The National Policy Statement on Electricity Transmission

The National Policy Statement on Electricity Transmission (the NPS) took effect in April 2008. It recognises the national importance of the electricity transmission network and sets out a policy framework for managing the effects of the network under the RMA. The objectives and policies of the NPS must be given effect to in regional and district plans and in regional policy statements.

The objective of the NPS is to recognise the national significance of the electricity transmission network by facilitating the operation, maintenance and upgrade of the existing network and the establishment of new transmission resources to meet the needs of present and future generations while managing:

• the adverse environmental effects of the network
• the adverse effects of other activities on the network.

Policy 1 of the NPS requires that decision-makers recognise and provide for the national, regional and local benefits of sustainable, secure and efficient electricity transmission, and spells out the benefits. Specific policies relevant to electricity transmission activities are:

• Policy 2: in achieving the purpose of the RMA, decision-makers must recognise and provide for the effective operation, maintenance, upgrading and development of the electricity transmission network
• Policy 3: when considering measures to avoid, remedy or mitigate the adverse environmental effects of transmission activities, decision-makers must consider the constraints imposed on achieving those measures by the technical and operational requirements of the network
• Policy 5: when considering the environmental effects of transmission activities associated with transmission assets, decision-makers must enable the reasonable operational, maintenance and minor-upgrade requirements of established electricity transmission assets.

Other policies relate to substantial upgrades, new lines, protecting the transmission network from the activities of third parties, and long-term strategic planning for transmission assets.

• Policy 4: when considering the environmental effects of new transmission infrastructure or major upgrades of existing transmission infrastructure, decision-makers must have regard to the extent to which any adverse effects have been avoided, remedied or mitigated by the route, site and method selection.
• Policy 6: substantial upgrades of transmission infrastructure should be used as an opportunity to reduce existing adverse effects of transmission, including such effects on sensitive activities, where appropriate.
• Policy 7: planning and development of the transmission system should minimise adverse effects on urban amenity and avoid adverse effects on town centres, areas of high recreational value or amenity and existing sensitive activities.
• Policy 8: in rural environments, planning and development of the transmission system should seek to avoid adverse effects on outstanding natural landscapes, areas of high natural character and high recreational value and amenity, and existing sensitive activities.
• Policy 9: provisions dealing with electric and magnetic fields associated with the electricity transmission network must be based on the guidelines of the International Commission on Non-Ionizing Radiation Protection (1998) and recommendations from the World Health Organization monograph Environment Health Criteria (No. 238, June 2007) or its revisions, and any applicable New Zealand standards or national environmental standards.

With the NPS in place, by April 2012 each council will need to:

• assess plan rules relating to transmission activities
• determine whether the existing rules meet the requirements of the NPS
• revise the rules, making adequate opportunity for transmission activities without significant adverse effects to be undertaken as permitted activities, and taking account of the operational and technical requirements when formulating permitted activity terms and conditions, and resource consent requirements
• notify the plan change or variation
• consider and hear submissions from Transpower and the public
• respond to appeals on the council decision.

2.3.3 District and regional plans

Regional plans contain rules that relate to electricity transmission activities, including:

• land disturbance
• discharges to land, air and water
• activities in the beds of lakes and rivers and the coastal marine area.

District plans contain objectives, policies and rules that govern aspects of electricity transmission and aim at managing the environmental aspects of electricity transmission activities, such as:

• land use
• visual effects, landscape and activities in special areas
• signs
• subdivision.

2.3.4 Local authority controls over transmission activities

Transmission activities may be authorised by:

• existing-use rights
• permitted activity status in district plans
• resource consents
• designations.

Each of these is discussed below.

Existing-use rights

Section 10 of the RMA sets out “existing-use rights”, which allow land to be used in a manner that contravenes a rule in a district plan or proposed district plan if it can be demonstrated that:

• the use was lawfully established before the rule became operative or the proposed plan was notified
• the effects of the use are the same or similar in character, intensity and scale to those that existed before the rule became operative or the proposed plan was notified.

Permitted activity status in district plans

Most plans specify that some minor activities associated with the maintenance and upgrading of transmission lines are permitted, subject to conditions. Some plans recognise the national significance of the transmission network by permitting a wide range of transmission activities, whereas other plans only provide for a limited range of activities or impose stringent conditions. Transpower often applies for “certificates of compliance” for activities permitted by plans in order to provide certainty about the status of the activity.

Resource consents

An activity that is not an existing use or a permitted activity requires resource consent or a designation (see below). A resource consent is an approval for an activity regulated under the RMA. Land-use consents and subdivision consents are granted by district councils. Coastal permits, water permits, discharge permits and land-use consents for activities specified in a regional plan are obtained from regional councils.

Activities may be assessed as:

• permitted − they do not require a resource consent provided the standards, terms or conditions specified are complied with
• controlled − a resource consent is required, but the consent authority must grant the consent unless it has insufficient information, and it can only impose conditions on the consent for matters over which control is reserved
• restricted discretionary − a resource consent is required, the consent authority may grant or decline the consent, and conditions can only be imposed for matters to which discretion is restricted
• discretionary − a resource consent is required, and the consent authority may decline the consent or grant it with or without conditions
• non-complying − a resource consent is required, the consent authority may decline the consent, or grant it with or without conditions, but the consent authority may only grant a consent if it is satisfied that the adverse effects will be minor (other than effects on persons who have given their written consent), and/or the activity will not be contrary to the objectives and policies of any relevant plan or proposed plan
• prohibited: no resource consent application may be made, and a resource consent must not be granted for the activity.

Designations

A designation in a district plan identifies an area of land for use for public works or projects, and it may have conditions attached to it. Only requiring authorities (network utility operators approved by the Minister for the Environment, local authorities and Ministers of the Crown) can arrange for a designation, in a similar way to applying for a resource consent. A designation gives the requiring authority rights to undertake specified land-use activities in the designation corridor without obtaining resource consents.

Land owners affected by a designation can apply to the Environment Court for an order obliging the requiring authority to purchase or lease the land. A designation also places restrictions on what anyone other than the requiring authority can do on the designated land without the requiring authority’s permission. Designations apply to district plans only. Any works outside the scope of the designation may require land-use consent. Resource consents from regional councils may also be required, even for works authorised by the designation.

Section 3.2.4 of this report describes the designation process in more detail.

2.3.5 Electricity Act 1992

The Electricity Act 1992 sets out the regulatory framework for electricity. It provides for the regulation of the supply of electricity and the electricity industry. The Act’s coverage includes the powers and duties of electricity operators and other owners of electricity works, electrical codes of practice, the registration and licensing of electrical workers, restrictions on electrical work, and governance of the electricity industry.

The Act also provides the mandate for the construction and operation of a national transmission network. Most of the network was constructed before 1988, and the Act maintains the right to occupy private land without the need for land owner agreements. This is provided for by deeming all pre-1988 lines to be lawfully installed and determining that the line owners should continue to have rights of access to existing works for maintenance.

There is limited interaction between RMA processes (planning documents, resource consents and so on) and activities under the direction of the Electricity Act 1992. The links between the two include:

• the nature of restrictions on Transpower and/or land owner activities via negotiated agreements will differ from restrictions imposed by district and regional plans, even though both may seek to control the same activity
• the Electricity Commission considers the cost of complying with the RMA as part of its grid investment test.

The Electricity (Hazards from Trees) Regulations 2003

The Electricity (Hazards from Trees) Regulations 2003 (the Trees Regulations) are mandatory requirements under the Electricity Act for managing trees adjacent to power lines. The Trees Regulations set out the distances from electrical conductors within which trees must not interfere, and specify who has responsibility for cutting or trimming interfering trees. Tree owners are responsible for any trees they own that are growing close to conductors. The line maintenance contractor is responsible for the service of any notices under the Trees Regulations, so that trees that threaten the safe operation of the transmission line can be removed or trimmed. Tree owners can opt out and get the line owner to manage the trees on their behalf. Resource consent may, however, still be required under the RMA for managing some trees.

2.4 Problem statement

2.4.1 Inconsistent rule framework

Local plans have a wide variety of approaches to managing electricity transmission. Information from a stocktake of district plans carried out in 2006 (Burtons, 2006) and a review of specific plan provisions by the Ministry for the Environment carried out in 2008 revealed three specific problems:

• a lack of consistency between plans
• difficulty determining consent requirements for activities carried out on a linear network traversing districts
• plan rules designed for a wide range of activities may be overly stringent for an activity with clearly defined effects (effects are location-specific; it is the range of structures that is uniform).

A summary of the Ministry for the Environment’s plan review is provided in section 5.5 of this report.

Lack of consistency between plans

The upgrade of a line passing through several districts could require resource consents in some districts but not in others. For example, placing transmission lines underground is permitted in an estimated fifty-seven district plans, restricted discretionary in nine plans and full discretionary in one plan. Delays in obtaining approvals in one district (for example, if one district decides to notify the consent application) could cause project delays that affect the entire project − not just that portion of the work.

Difficult determination of resource consent requirements

District plans are designed for their primary users − the general public and businesses intending to carry out activities at specific locations within a district planning zone. For a network utility company with a linear network traversing all zones, the structure of zone-based plans makes it very difficult to determine consent requirements for transmission maintenance or an upgrade project. The Transpower-commissioned survey done by Burtons found that a third of plans are straightforward for utility companies to interpret because they have a stand-alone utilities chapter setting out clear rules for electricity transmission (Burtons, 2006). However, two-thirds do not have a stand-alone utilities chapter and require referring to rules interspersed throughout the plan to determine consent requirements.

The survey also found that only a quarter of district plans provide for transmission activities that do not have significant adverse effects to be permitted activities. Some plans appear to provide for “minor upgrade” as a permitted activity, but either define this very narrowly or impose a layer of zone-based rules which allow only basic maintenance to be permitted.

Half of district plans do not make provision for upgrading work on transmission lines that would meet the operational needs of the line owner. For example, many plans impose the same consent requirements (usually full discretionary) on upgrading existing lines (beyond minor upgrading) as for new lines, even though the effects of a new line are much more significant than the upgrading of an existing line. Plans, particularly district plans, deal with a very wide range of activities with wide-ranging effects, and frequently take a conservative approach to controlling the effects of these activities. If the plan could consider the precise nature of an activity and design rules specific to that activity it might be possible to impose a more targeted level of control.

The lack of consistency in district plan rules for high-voltage electricity transmission activities results in:

• variability in the way the adverse effects of transmission activities are managed
• unnecessary time spent by local authorities and Transpower assessing consent requirements for a project and obtaining RMA approvals
• delays in projects, which result in higher costs and an increased risk of grid outages
• costs to Transpower to make submissions on plans, and to appeal plan changes, in an effort to get consistent provisions for transmission into plans
• costs to local authorities for responding to submissions and appeals.

2.4.2 Implementing the NPS

The NPS on Electricity Transmission requires local authorities to notify plan changes to give effect to the NPS’s policies and objectives. Local authorities will need to assess plan rules against the NPS and formulate a set of rules that give effect to the NPS.

Some councils may determine that their rules already fit the objective and policies of the NPS. However, as seen from the discussion of plan requirements above (section 2.4.1), most local authorities would need to assess the effects of transmission activities and determine the most appropriate level of control for these activities. Once the specific nature of the activity is taken into account, revised rules could be more lenient than existing generic rules, or could still vary between districts.

Plan changes required to give effect to the NPS will also result in implementation costs for local authorities (see section 5.7 of this report).

2.4.3 RMA processing: plan changes

The NPS requires that all councils give effect to its policies by 2012. To meet their obligations under the RMA, councils will need to publicly notify and process a plan change or review. To determine the extent and nature of those changes it will be necessary to review the plan and any applicable bylaws. The resulting plan change or review will then have to be notified and consulted on during the submission process. After a council notifies its decision on the plan change or review, submitters have the opportunity to appeal the decision to the Environment Court, which could cause further processing delays.

In the absence of an NES, councils will need to notify and process plan changes to give effect to the NPS. Although an NES does not need to be incorporated into a plan, many councils have indicated that they would prefer to incorporate the NES into their plans to avoid confusion. Even if a council does not incorporate the NES it will still be necessary to review the plan and any applicable bylaws to determine the changes required to avoid confusion (for example, to make it clear that provisions for signs that conflict with the NES do not apply to the transmission network).

Table 5 in section 5.5 of this report sets out the actions we expect councils to take in the absence of an NES to give effect to the NPS.

2.4.4 Summary of the key problems

In summary, the key problems associated with high-voltage electricity transmission activities are:

• inconsistency of the provisions in local plans that apply to electricity transmission operation, maintenance and upgrade
• the cost of implementing the NPS in plans (with the risk of new plan changes still being variable and nationally inconsistent)
• RMA processing delays and costs.

These problems apply mainly to existing transmission lines. For new transmission lines Transpower will seek designations in district plans (or, in some cases, resource consents).