Appendix 2: Evaluation of options

Objective

Assessment criteria

Key criteria were developed to assess the effectiveness of several possible options in meeting the purpose of the RMA and the objective for the provision of detailed national guidance:

• provide national consistency
• manage the environmental effects of transmission
• provide certainty
• allow for local input into decision-making
• enable activities required to operate and enhance the grid
• provide protection from inappropriate activities
• be cost-effective
• be able to be implemented in reasonable timeframes.

Evaluation of alternative options

The status quo and the following options were evaluated against the evaluation criteria.

• Enact legislation to deem designations for existing transmission lines.
• Have Transpower obtain designations through the process set out in the RMA.
• Rely on a national policy statement alone to address the issue by setting out policies and objectives and having local authorities create rules to give effect to these if necessary.
• Devise national environmental standards that prevail over plan rules relating to electricity transmission.

This evaluation only considers RMA options. The option of enhancing the enforcement of the electricity code of practice is covered, for completeness, in the discussion document (See sections 3.2). The results of the analysis are presented in tables A1 and A2.

The status quo

The status quo has been assessed against the criteria, as follows.

• National consistency: there is no national consistency in treatment of the operation, maintenance and upgrade of existing infrastructure. Rules vary widely between districts.
• Manage the effects of transmission: the variability of plan rules means that in some cases controls may be insufficient, and in other cases minor activities without significant adverse effects may be subjected to an inappropriate level of control.
• Certainty: around half of local plans provide a reasonable degree of certainty to local authorities on the matters to be taken into account when considering whether an activity (Transpower or third party) is to be permitted, or the type of resource consent required.
• Local input: the current framework provides the opportunity for local input to decisions.
• Enabling: half of district plans do not provide for upgrade activities that do not have significant environmental effects as permitted activities. Many plans apply the same rules to new lines and upgrading existing lines.
• Protective: around a third of district plans provide adequate protection for the transmission network from inappropriate activities that could put the network at risk, through implementation of a 20-metre rule (consent required for building and / or subdivision within 20 metres of the transmission line). Over half of district plans do not provide protection for transmission lines.
• Cost-effective: the status quo results in Transpower expenditure on advocacy for appropriate rules in local plans. Transpower has lodged appeals against around two-thirds of district plans, resulting in costs for both local authorities and Transpower in resolving the issues. There are also significant costs for both local authorities and Transpower in interpreting complex plan rules, determining whether activities have existing-use rights, and obtaining resource consents for activities with no significant adverse effects.
• Timeliness: Transpower has the opportunity to have input into plans when they are reviewed on a 10-yearly cycle, which is a slow process. Although Transpower could request private plan changes, this would be an expensive and potentially adversarial process.

Deemed designations

A designation is an authorisation included in a district plan that allows a requiring authority (in this case, Transpower) to undertake works without a land-use resource consent on a site or route. A designation also places restrictions on what anyone other than the requiring authority can do on the designated land that would prevent or hinder the designated activity, without the requiring authority’s permission. Deemed designation would require special legislation to ‘deem’ designations that would apply nationally to all transmission lines.

• National consistency: deemed designations could be applied at any location in New Zealand, and could provide national consistency in the treatment of the existing network, including upgrades to existing infrastructure.
• Manage effects: deemed designations could manage the effects of transmission, but there would be extreme practical difficulties in coming up with a designation framework applicable at every location in New Zealand.
• Certainty: deemed designations would provide certainty to local authorities and Transpower about the status of transmission lines and activities.
• Local input: there would be no local input to decision-making. Deeming designations would not provide landowners with the opportunity to participate in the process of applying for a designation and any appeals. The only input would be via the select committee process at a national level. It is unlikely that deemed designations would be accepted readily by the majority of local communities.
• Enabling: deemed designations would give Transpower the right to do anything consistent with the designation without requiring resource consents under the district plan. Deemed designations could not authorise activities for which a consent is required under regional plans.
• Protective: deemed designations could restrict activities that could be carried out within the area of the designation and that could put the network at risk. However, they could not restrict activities carried out beyond designated boundaries, or address issues of reverse sensitivity. The potential cost of acquiring an interest in the land covered by the designation restricts the option of having a sufficiently wide designated strip to cover all off-site effects and third-party activities, which could put the integrity of the network at risk.
• Cost-effective: the costs to district councils could be reduced by transitional arrangements that do not require local authorities to revise plans immediately to include the designations. However, the main cost would be obtaining an interest in the land. Deemed designations would provide landowners with the opportunity to require Transpower to acquire or lease the land covered by the designation (section 185 of the RMA, Public Works Act 1981). The Reference Group report estimates that this would be extremely costly. Transpower have provided an unconfirmed estimate that the cost of acquiring interest in the land could be $7 billion.
• Timeliness: this option would require special legislation to deem Transpower to have designations over the existing transmission network. Legislation could be enacted within two years.

Deemed designations could potentially go some way towards resolving some of the issues with pre-1988 lines. They would provide nationally consistent authorisation for transmission activities (subject to conditions to control effects) and restrictions on what anyone other than Transpower could do on the designated land. However, there would be no local input to the process except via select committee hearings. The cost would be considerable: Transpower estimate the cost could be in the order of $7 billion. Deemed designations were not recommended by the Reference Group.

Transpower obtain designations

Under this option, Transpower would issue notices of requirement for the transmission network. The notices of requirement would be assessed by each local authority, and would be subject to submissions by the public, and appeals to the Environment Court.

• National consistency: this option would not provide consistency or certainty, because notices of requirement over a single line would be served on various local authorities, who could deal with them independently and propose different conditions. Transpower would be responsible for negotiating with local authorities to achieve consistent conditions across regions.
• Managing effects: designations would contain conditions to manage adverse effects.
• Certainty: once in place, designations would provide certainty to all parties.
• Local input: the designation process provides for local input: notices of requirement are publicly notified, the public can make submissions, the council holds a hearing if required, and can make recommendations to the requiring authority. Submitters and the local authority can appeal to the Environment Court.
• Enabling: as for deemed designations.
• Protective: as for deemed designations.
• Cost-effective: in addition to the costs of acquiring an interest in the land described above, the costs of Transpower obtaining designations would be much higher because of the cost of local involvement and possible Environment Court hearings. The cost could be spread over several years.
• Timeliness: obtaining designation for all transmission lines could be expected to take as long as 10 years.

This option would cost a similar amount to Transpower acquiring an interest in affected land using deemed designations, although it would give more flexibility to roll out notices of requirements over time and come to arrangements with landowners that could be less costly than outright purchase. However, the cost of the actual designation process in each district would be considerable, both for Transpower in preparing notices of requirement, for local authorities and the public in assessing notices, and in appeals to the Environment Court. Each council would recommend on designations, so there would be no national consistency. This option is also not favoured because of the extremely high cost, and it is likely that implementing it would take several years, or even decades.

National policy statement alone

In this option, the national policy statement would be the only national guidance provided. There would be no national environmental standards developed.

• National consistency: relying on an NPS would not give national consistency. An NPS can set overall policies, but would require local authorities to change their plans to give effect to policies by introducing specific rules. There could be considerable local variability in the rules.
• Manage effects: this would depend on the content of the local rules.
• Certainty: the ability to provide certainty would depend on how local rules are crafted.
• Local input: there would be the opportunity for local input into the development of local rules.
• Enabling: whether or not this option could provide for activities required to maintain and upgrade the transmission network would depend on the content of local rules.
• Protective: whether or not this option could protect the transmission network from inappropriate activities that could put the network at risk would depend on the content of local rules.
• Cost-effectiveness and timeliness: the cost would depend on whether local authorities waited until the next plan change to introduce rules to give effect to the national policy statement. Requiring that plans be changed within short timeframes would result in considerable cost to local authorities and to Transpower in submitting on plan changes.

The NPS would provide policies and objectives that local authorities would implement by developing appropriate rules. While this would give an opportunity for local involvement, it would not provide national consistency because implementation would be dependent on the rules developed locally. It could impose considerable costs on local authorities in plan changes to implement suitable rules.

Permitted activity national environmental standards alone

Permitted activity standards would set out activities that Transpower could undertake to maintain and upgrade the network, which do not have significant environmental effects. Terms and conditions would define the activities and set thresholds of effects.

This option was recommended by the Reference Group, and a detailed investigation of the effectiveness, costs and benefits was undertaken. It was found that the benefits only just exceeded the costs. The present value of the net benefit (over a 10-year period) was only $48,500, and the ratio of benefits to costs was 1.08.

Although a permitted activities standard would provide a nationally consistent approach for minor activities, a serious disadvantage is that it would provide no guidance on how to treat activities that do not meet the effects thresholds set out, or that are not listed. The question is complex and open to different interpretation by different local authorities. In fact a permitted activities only NES may make the situation more confusing for activities beyond permitted activities. This confusion could result in an increase in costs and project delays, and may result in plan changes to accommodate the NES.

• National consistency: standards for permitted activities would provide national consistency for maintenance of the existing network, including minor upgrades to existing infrastructure. However, there may be inconsistencies in the way plans deal with activities that are more than minor.
• Managing effects: only for minor activities.
• Local input: there would be the opportunity for local input into decision making on consent applications for activities falling outside the permitted activities NES.
• Certainty: while providing certainty for activities falling within the scope of the NES, a permitted activities standard could increase the confusion surrounding the status of other transmission activities.
• Enabling: permitted activities would enable Transpower to undertake activities that do not have significant adverse effects without requiring resource consent, but there is a risk that any activity falling outside the permitted activities thresholds could be regarded as discretionary, when a controlled status could be more appropriate.
• Protect the transmission network from inappropriate activities that could put the network at risk: not applicable.
• Cost-effective: the benefits only just exceed the costs, by less than the margin of uncertainty in estimating costs and benefits.
• Timeliness: a permitted activities NES could be implemented within 18 months.

Under this option, Transpower would continue to advocate for changes to district plans to incorporate provisions for activities that are beyond permitted status, at significant cost to both Transpower and the local authority. This option is not favoured because it does not fix the problem.

Preferred option: National environmental standards to manage transmission activities and transmission risks

The preferred option is the development of national environmental standards to:

• provide for transmission activities that do not have significant adverse effects to be permitted activities (ie, they can be undertaken without the need for resource consents)
• specify resource consent categories for other transmission activities
• protect transmission lines from inappropriate third-party activities.

This is preferred because the NES:

• can provide a consistent set of standards that apply across all districts, and provide certainty to local authorities and Transpower about the status of transmission activities and third-party activities that could affect transmission
• can facilitate transmission activities that do not have significant adverse effects, and make appropriate provisions for other transmission activities
• can provide an enforceable framework for controlling activities that could affect the transmission network
• shows significant benefits over costs (see table of costs and cost savings, table A3).

An assessment of the preferred option in terms of the selection criteria is given below.

Two standards are proposed (see chapter 4 of the discussion document for a description of the proposals). The first standard sets out a framework for managing the environmental effects of electricity transmission. It specifies activities that could be permitted (subject to terms and conditions to ensure there are no adverse effects) and the types of activities for which resource consents are required. The second standard sets out a framework for managing the potential adverse effects of activities undertaken adjacent to the transmission lines. It proposes controls on earthworks, deposition, buildings, subdivisions and boat ramps. Two options are presented for buildings: one closely aligned to electrical safe distances, the other a 20-metre zone each side of transmission lines where consent is required.

Assessment of standards providing for a range of maintenance and upgrading activities

• National consistency: this option provides for a nationally consistent framework of permitted activities and resource consent requirements. Under this option there would be no requirement for the expense of Transpower submitting on plan changes, or for the local authority responding to Transpower appeals.
• Manage effects: the proposed NES provides a consistent framework for managing the effects of transmission activities.
• Certainty: this option would provide certainty to local authorities and Transpower regarding the matters to be taken into account when considering whether an activity (Transpower or third party) is to be permitted or, if a resource consent is required, what type of consent will be required.
• Local input: there would be the opportunity for local input into decision making on activities for which resource consent is required, and through submissions on the NES proposals.
• Enabling: it is unlikely this option would be more enabling than a permitted activities NES for minor activities. However, it may facilitate the processing of resource consents for activities that are not permitted by the NES, focusing on the key issues and involving an appropriate amount of notification.
• Cost-effective: the cost of developing and evaluating this NES would be higher than for a permitted activities NES, but the benefits are much greater. The cost of implementation would be about the same as a permitted activities standard. Councils would not need to amend plans, because the NES would prevail over relevant plan rules.
• Timeliness: a transmission activities NES could be implemented within 18 months.

Assessment of standards to control activities that could put the national grid at risk

• Consistency: this option would provide a consistent set of controls on activities adjacent to transmission lines that could put the network at risk.
• Nationally applicable: the controls would be applicable nationally.
• Certainty: this option would provide certainty to local authorities, Transpower and landowners about consent requirements for activities adjacent to transmission lines.
• Local input: local input would be through submissions on the NES proposals.
• Protection: an NES could provide a reasonable degree of protection from activities that could put the transmission line at risk.
• Cost-effective: the cost of developing an NES, based on existing controls under NZECP 34 and district plans, is reasonable. Councils would not need to change their plans, because the NES prevails over applicable rules in plans. The benefits to arise from significant cost reduction in rectifying problems with the national grid caused by inappropriate third-party activities.
• Timeliness: An NES could be in place within 18 months.

Table A1: Assessment of options for managing the environmental effects of electricity transmission

Table A2:      Assessment of options for managing the adverse effects of third-party activities on the national grid

Summary of costs and benefits of the preferred option

A full description of the costs and benefits of the preferred option is set out in chapter 5 of this discussion document.

The key benefit of the proposed NES for transmission activities is that it could result in a considerable reduction in expenditure for both Transpower and local authorities in dealing with submissions on plan changes (where Transpower advocates for rules relating to transmission) and appeals. It should provide certainty in the type of consent required for each activity, and reduce consent processing timeframes and costs. The standard may result in local authority expenditure through plan changes to align with the standard (although this is not legally required) and government implementation costs.

The key benefit of the proposed NES addressing transmission risks is an estimated reduction in Transpower’s expenditure on rectifying problems. The benefit is significantly greater for the 20‑metre zone option, and this option would also result in a significant reduction in plan advocacy costs for Transpower and councils. Some councils already have this rule in their plans. The costs of this proposal fall on local authorities in terms of monitoring and enforcing the standards, and on landowners in terms of additional requirements for resource consents.

Table A3 summarises the costs and benefits of the proposed transmission activities NES alone, and in combination with each option for a transmission risks NES. The greatest net benefit would be achieved by implementing the transmission activities NES in combination with the ‘20 metre consent required’ zone for the transmission risks NES.

Table A3:      Preliminary summary of benefits of the proposed national environmental standards

Sensitivity analysis

The sensitivity of the results to changes in assumptions about the costs and benefits of the proposals was assessed by varying these assumptions. The analysis looked at the changes in the overall costs and benefits if specific costs and benefits were increased or decreased by 25%. In the case of landowner costs, the sensitivity analysis looked at the effects of increasing the costs or benefits by 50%, as these costs were less certain.

The results presented here apply to the costs and benefits at a 10% discount rate.

For the transmission activities NES:

• If the expenditure by Transpower on maintenance and upgrading occurs earlier or later than predicted, there is very little change in the net present value or the benefit : cost ratio.
• If the benefits were 25% less than estimated, the net present value would drop to $1.4 million, and the benefit : cost ratio would drop to 2.8 to 1. The analysis is sensitive to changes in assumptions about benefits.
• If the implementation costs were 25% more than estimated, then the net present value would drop to $2.1 million and the benefit : cost ratio would drop to 3.4 to 1. The analysis is relatively insensitive to changes in assumptions about council costs.
• It is possible that the benefits of the NES could be less and the costs more than estimated at the same time. For example, if the NES resulted in a requirement for more consent applications, the benefits (of lower consent costs) would be less than anticipated and council costs higher. In the worst case scenario (benefits 25% lower and costs 25% higher than predicted) the net present value would drop to $1.4 million and the benefit cost ratio would drop to 2.6 to 1, which is still worthwhile.

For the transmission risks NES (20-metre consent-required zone, option B):

• If the benefits (operational cost savings) were 25% lower than estimated, then the net present value would decrease to $1.6 million and the benefit : cost ratio decrease to 1.6 to 1. The analysis is relatively sensitive to changes in assumptions about the operational cost savings.
• If the landowner costs were 50% higher than estimated, the net present value would drop to $2.3 million and the benefit : cost ratio to 1.6 to 1. The analysis is moderately sensitive to changes in assumptions about landowner costs.
• If council costs were 25% higher than anticipated, the net present value would drop to $2.9 million and the benefit : cost ratio to 2 to 1. The analysis is relatively insensitive to changes in assumptions about council costs.
• The relationship between costs and benefits is complex. It is unlikely that the landowner costs and the council costs would increase simultaneously. If landowner costs were higher than predicted, then it is likely that although consent processing costs would be correspondingly higher, enforcement costs would be lower. If the benefits were lower than anticipated, it may mean a high degree of non-compliance, with lower landowner costs (fewer consents sought) but higher enforcement costs.

In the worst-case scenario, if costs were greater than predicted and benefits less, as described above, then the net present value would decrease to $0.6 million, and the benefit : cost ratio to 1.2 to 1. The equivalent worst-case scenario for the option based on NZECP 34 requirements would be a net present value of $5,000 and a benefit : cost ratio just over 1