Executive summary

Background

The national grid traverses 72 local and 12 regional councils and is operated by Transpower New Zealand Ltd (Transpower), a state-owned enterprise. A variety of approvals are required under the Resource Management Act 1991 (RMA) for the operation, maintenance and upgrade of the grid. A single line upgrade is likely to cross several districts, and the type of approval required depends on the requirements of each district plan, which can vary considerably between districts. This variation results in inconsistencies in the way the effects of transmission are managed, and there is scope for reducing the time spent determining the consent requirements for transmission work in each district.

The objective of the RMA is to promote the sustainable management of natural and physical resources. The definition of ‘physical resource’ includes structures such as the high-voltage electricity transmission infrastructure (the national grid). Sustainable management requires protecting this resource from the adverse effects of activities carried out in proximity to the grid. Electricity transmission also has adverse effects on the environment, and sustainable management in this context requires managing these effects.

Developing national environmental standards

National environmental standards (NES) can ensure that planning controls for electricity transmission are appropriate and nationally consistent, and can also manage activities that could endanger the integrity of the national grid if carried out near the lines.

The proposal to introduce NES is part of a wider government exercise to provide national guidance under the RMA on network infrastructure, including telecommunications and electricity generation. The first step was an investigation of the merits and potential scope of a range of options by the Reference Group on Electricity Transmission, comprising representatives from central and local government, landowners and industry. After evaluating the options, the Reference Group consulted with stakeholders and concluded that NES would be the best option for providing detailed national guidance on electricity transmission. On the basis of the Reference Group’s report, the Government decided to consult on a proposed national policy statement (NPS) and proposals for NES for electricity transmission.

An NPS was released for consultation by an independent board of inquiry in May 2007 and submissions closed on 24 June (see Appendix 1). The board will report back to the Minister for the Environment in December 2007.

This discussion document follows on from the initial consultation on proposals for national guidance and direction under the RMA for electricity transmission. It builds on the work of the Reference Group by setting out resource management issues faced in managing the operation, maintenance and upgrading of the electricity transmission network, and describes how standards under the RMA have the potential to resolve some of these issues. It then seeks your input on the preferred option for NES.

The proposed standards

This document proposes two NES. A transmission activities NES would set out a framework for managing the effects of electricity transmission operation, maintenance and upgrade activities, which would be consistently applied across all districts. The proposed NES would allow transmission activities that do not have significant adverse effects to be carried out without resource consent, subject to terms and conditions to limit the effects. Activities beyond the thresholds for permitted activities would require a resource consent. The level of assessment proposed for consents would be proportional to the likely environmental impacts. The proposed NES would not apply to the construction of new lines.

A resilient national grid also relies on protecting the grid from activities that could affect transmission lines or put the grid at risk; for example, by destabilising transmission support structures or interfering with the conductors (wires). Controls on third-party activities under the Electricity Act focus on electrical safe distances, but these distances may be much less than is appropriate for land-use planning. These controls also tend to be applied after the event and leave rectification to the grid operator. Two-thirds of plans do not provide any protection for transmission lines.

This document therefore also proposes a transmission risks NES to address the issue of risk to the national grid. The proposed NES would incorporate some of the provisions of the New Zealand Electrical Code of Practice for Electrical Safe Distances (NZECP 34) relating to excavations adjacent to towers, depositing material under lines, and boat ramps. The proposal includes two options for building near lines. One option imposes restrictions around the support structures and wires. The second option imposes a 20-metre zone each side of the transmission line, within which resource consent would be to construct buildings or structures. In addition, the proposal includes requiring resource consents for subdivision within this zone (aligned to current district council practice).

Costs and benefits

Both proposed NES will benefit the electricity consumer through reducing the likelihood of future electricity supply interruptions and grid constraints, which could have economic impacts on businesses and communities, and could result in loss of life. These potentially significant benefits to consumers have not been quantified because the magnitude and likelihood of these effects are difficult to predict.

The quantifiable benefits of the proposals for a transmission activities NES are the cost savings to Transpower from having a nationally consistent framework for managing the adverse effects of transmission. Transpower will benefit from reduced costs in not needing to advocate for appropriate rules in plans, and from a reduction in costs of approvals for maintenance and upgrading projects.

A transmission activities NES may impose additional costs on councils and Transpower arising from additional resource consent requirements in some districts, but these will be offset by fewer resource consents being required in other districts. Local authorities will face general implementation costs and some non-recoverable costs in dealing with an increase in applications for certificates of compliance under the NES. Although there is no legal requirement to do so, some councils will choose to change their plans to incorporate the NES to avoid confusion. Overall, the benefits of the proposed transmission activities NES outweigh the costs.

The key benefit of the proposed transmission risks NES is a reduction in Transpower’s costs to fix problems and repair lines damaged by third-party activities. Ultimately these costs are passed on to consumers, and although at an individual level the difference may not be noticeable, at a national level Transpower spend over $5 million per year rectifying problems caused by third parties. An additional benefit, which could not be quantified, is reducing the risk of interruption to the electricity supply, which can have significant economic impacts. Line outages are inconvenient for consumers and can affect their health and wellbeing, and could result in loss of life.

However, the proposed transmission risks NES will impose additional consent requirements on landowners for activities carried out near the lines. In other words, it may impose restrictions on the activities that can be carried out on some land. This NES will also increase local authority enforcement costs and generate additional consent processing costs (not all of which may be recoverable from the applicant). The costs for those councils choosing to change their plans to incorporate the NES are the same as for the transmission activities NES (ie, regardless of whether the change is for one or two NES). Central government will face implementation costs for the standards, for producing guidance material and for monitoring implementation.

Both options for controlling buildings near transmission lines have been evaluated. The costs and benefits associated with a 20-metre consent-required zone option will be considerably higher than the option based on NZECP 34 electrical safe distances. In particular under the 20-metre zone option, Transpower would benefit by not needing to advocate for appropriate rules in district plans and a significant reduction in repair costs.

The costs for council plan changes and government implementation costs are the same regardless of whether one or two NES are introduced. Therefore the net benefit of introducing two NES together is greater than the sum of the net benefits of each proposed NES introduced alone.

Overall, the proposed transmission activities NES alone would have a net benefit of $2.1 million over a 10-year period, and the ratio of the present value of benefits to costs is about 3.7 to 1. Implementing the transmission risks NES in conjunction with the transmission activities NES would have a net benefit over 10 years of $3.8 million for the option based on electrical safe distances. The ratio of benefits to costs is about 2.9 to 1. If the option based on the 20-metre zone for buildings were implemented in conjunction with the proposed transmission activities NES, the net benefit over 10 years would be $5.9 million and the ratio of benefits to costs would remain at about 2.9 to 1.

This economic evaluation does not include some benefits that were potentially significant but could not be quantified. For instance, the assessment doesn’t include the potentially significant economic costs of line outages caused by grid constraints or third-party activities, or loss of life. (For example, the estimated economic cost of the 2006 Auckland power disruption was $70 million.) The assessment also does not include the costs of consent-related delays to line upgrades.

Submissions are invited on the proposals in this discussion document. We invite you to read through the document, and then use chapter 7 for making a submission.