1. Introduction

1.1 Overview

The electrical power infrastructure comprises three systems: generation, transmission and distribution. The subject of this report is electricity transmission, or the 'national grid', which supplies and transfers electricity around the country.

Debate on how best to develop major infrastructure projects is not new. Major infrastructure is typically resource intensive, performs vital services and is highly noticeable. Since the 1950s and 1960s - when the bulk of the electricity transmission network was established - environmental values have changed. The passing of the Resource Management Act (RMA) in 1991 was instrumental in altering the debate, thinking and responses relating to the imperative to sustainably manage the environment. Making an effort to strike a balance between social, cultural, ecological and economic values has now become the norm.

Concerns over how best to develop major infrastructure were acknowledged again during consultation on amendments to the RMA in 2004/05. In response, the Government established a Reference Group to advise on the feasibility and merits of a national policy statement (NPS) and/or national environmental standards [One or more national environmental standard (NES) may also be developed in addition to the National Policy Statement to add certainty on some resource management matters relating to the electricity transmission network.] to address issues associated with the management of electricity transmission under the RMA.

Following public consultation, the Reference Group [The Electricity Transmission Reference Group comprised representatives of agencies, industries and organisations with a specific interest in electricity transmission. See the Glossary for more detail.] produced a report entitled: The Merits and Potential Scope of National Guidance on the Management of Electricity Transmission under the RMA (April 2006). [The Reference Group's report can be located at:www.med.govt.nz/energy/nps/transmission/] The Reference Group's report identified three main electricity transmission policy areas that national guidance (an NPS and/or national environmental standards) could address:

• the positive effects of transmission
• managing adverse effects on transmission
• managing adverse effects of transmission.

The Reference Group considered that "there are likely to be net benefits" in developing an NPS.

Demands on the electricity system are growing. The need for upgrades and extensions of the transmission network are likely to escalate in future, as will the costs of the current situation or 'status quo' (ie, no action). Therefore, to an extent national guidance would anticipate this development.

The NPS is intended to provide national direction on the sustainable management of the electricity transmission network, and in particular to raise the status of electricity transmission to one of national significance when considering resource management proposals.

The NPS is due to be notified by an independent Board of Inquiry, [A Board of Inquiry is an independent body established by the Minister, under section 47 of the RMA, to inquire into and report on a proposed NPS.] which will undertake public consultation and public hearings. Once the inquiry is complete, the Board will prepare a report that may include recommendations to the Minister for the Environment to consider and make changes to the NPS.

1.2 Section 32 evaluation and report

RMA section 32(3) requires that an evaluation must examine:

1. the extent to which each objective is the most appropriate way to achieve the purpose of this Act; and
2. whether, having regard to their efficiency and effectiveness, the policies, rules, or other methods are the most appropriate for achieving the objectives.

RMA section 32(4) requires that the evaluation take account of:

1. the benefits and costs of policies, rules or other methods; and
2. the risk of acting or not acting if there is uncertain or insufficient information about the subject matter of the policies, rules, or other methods.

1.2.1 Methodology

Section 32 of the RMA does not explicitly require an evaluation of whether the NPS is 'desirable'. This assessment is required separately under section 45 of the RMA. In completing an evaluation in accordance with section 32 there is, however, an explicit requirement to assess alternative approaches to the NPS.

The main alternative to the NPS is the status quo, which therefore serves as the baseline for this evaluation. The relevance of the non-RMA elements, and their relevance to costs and benefits of the RMA elements, are considered as part of this evaluation.

In considering the appropriateness of the objective of the NPS, consideration is given to:

• the purpose of the objective, which is to state the outcome sought from the resolution of a resource management issue
• whether, through the resolution of an identified resource management issue, the objective will help achieve the purpose of the RMA, being the promotion of the sustainable management of natural and physical resources.

Having considered the appropriateness of the objective, the related policies are then evaluated, including the assessment of alternative approaches to achieving the objective. In evaluating the policies, consideration is given to:

• the costs and benefits of each policy and, having considered these matters, how efficient the policy would be in achieving the objective
• how effective, or successful, the policies would be in achieving the objective and thereby resolving the relevant issue.

Note that for the purposes of a section 32 evaluation under the RMA, the terms 'costs' and 'benefits' take broad meanings and include environmental, social and economic matters.

1.2.2 An iteration of the section 32 process

It is important to note that section 32 requires an ongoing assessment over the full length of the policy development process. Within this context the following evaluation is just one iteration, which mainly considers the wider appropriateness of the NPS.

1.3 Statement of the issues

The transmission network's national significance stems from it being an attenuated network of infrastructure that traverses all of New Zealand's local council territories, [Except for the Chatham Islands.] connecting areas of growing electricity demand (mostly in the North Island) with areas of excess electricity supply and hydro-storage capacity (mostly in the South Island). It provides a vital link that smoothes out variations in availability and the price of electricity in different parts of the country that would occur with less inter-connected systems, benefiting all localities.

Demand for electricity is increasing with population growth, rising incomes and new technology powered by electricity. Electricity is subject to variation and demand peaking that can only be met by providing excess local capacity in generation that gets utilised infrequently, or by utilising spare capacity nationwide through effective transmission.

A further factor is that New Zealand's ratification of the Kyoto Protocol [The Kyoto Protocol to the United Nations Framework Convention on Climate Change is an amendment to the international treaty on climate change, assigning mandatory targets for the reduction of greenhouse gas emissions (including those produced by burning fossil fuels) to signatory nations.] and international commitment to restrain carbon emissions have increased interest in new kinds of power generation from renewable sources (hydro, wind, geothermal), which are often located a long way from metropolitan areas. In many cases these necessitate new lines and connections to the transmission grid.

The combination of growing demand and the need to provide electricity in environmentally sustainable ways gives increased importance to the improvement, upgrade and extension of the transmission system.

The fact that transmission lines cross district boundaries means that:

• transmission appears to involve an imbalance of local costs for benefits elsewhere, yet all localities benefit from effective integration of the grid
• there is significant risk of trans-boundary 'externalities' caused by impediments imposed in one district having consequences and adverse effects on power supply in other districts.

Control over externalities is one of the main justifications for national instruments that create a common understanding and consistent treatment of transmission activities across different districts.

The main issue to be addressed is confirming the importance of electricity transmission and its positive benefits to the nation. An NPS, by its very nature, will give nationally significant status to the transmission network, to help ensure both the national benefits of transmission and local costs are taken into account in local decision-making under the RMA.

Complementary issues concern the consistent management of activities that may interfere with electricity transmission, and acknowledging the adverse effects electricity transmission activities can have on places and values.