Appendix B: Estimates of Costs

KEY

* One-off costs for plan adjustment $12,000 x 12 regional plans; $75,000 x 73 district plans

** $100,000 in first year; $50,000 in each of next two years

B Unquantifiable benefit

C Unquantifiable cost, negative impact

Nil No effects expected

NA Not applicable to the objective/policy

? Probable effects, but no information on amount or balance of positive/negative

Sunk Committed/spent

Transpower

Plan advocacy

Under the status quo, plan advocacy (including appeals to the Environment Court) costs are estimated to be approximately $350,000 per annum. This includes consultants and the equivalent of one internal FTE for Transpower.

Under Policies 1, 2, 3, 4 and 5 an unquantifiable benefit is expected with the introduction of the NPS. This is because the NPS reinforces the need for regional and district councils to take into account the national benefit from the enhanced integration of the transmission network. This will add some weight to Transpower's arguments, particularly where it advocates a more consistent treatment of transmission activities across councils.

The benefits will be small because the NPS gives no specific direction as to how it should be taken into account when dealing with planning rules. It could even cause some confusion in some councils between what has been written down in district plans and what is written into the NPS.

Under Policy 6, there is a medium benefit because the NPS gives greater direction (relative to other policies), specifying that councils should base their provisions on ICNIRP guidelines.

Consents

Under the status quo no average dollar amounts spent on consents have been possible to quantify. This is partly due to the large variability in money spent on each consent, and partly due to Transpower being unable to pull timely information out of their database.

Under Policies 1, 2 and 3 small unquantifiable benefits are expected from the NPS because councils have to consider the national importance of the transmission network along with other Transpower arguments. This could deliver smoother passage through council processes for some consents.

Under Policies 4 and 5 there will be no change in costs and benefits. Under Policy 6 a medium benefit is expected because it is clear what approach councils should take (ie, follow the ICNIRP guidelines).

Operating costs

Operating costs are those costs incurred by Transpower in general operations. They are increased by planning processes that impose undue delays on operations, and reduced by more transmission-friendly processes. Planning-induced operating costs are potentially large if delays in process cause Transpower to miss an opportunity to work on a particularly part of the network which may not come around again for some time, necessitating rescheduling of planned activities.

Transpower costs under the status quo have not been quantified because of the difficulty in obtaining representative data given high variability of costs on a year-to-year basis.

Under Policies 1, 2, 3 and 6 some benefit is expected because the NPS gives some degree of clarification over the importance of transmission, which will reinforce some of Transpower's arguments to councils, particularly about the importance of the network and, in the case of Policy 6, clarification on the guidelines to be followed. Under Policies 4 and 5 there will be no change in costs and benefits.

Managing third parties

Under the status quo, third-party costs are approximately $180,000 per annum. This includes monitoring of district plan changes, one full time equivalent internally, consultant costs, and information booklets. Call centre enquiries and line inspections were not valued, although it was recognised that they were important activities related to third-party activities.

Under Policies 1 and 2 a medium benefit is expected, since Transpower will not have to publish information booklets for councils and interested parties. This amounts to an avoided cost of $22,000 per year. Under Policies 3 and 5 the NPS does not apply. The NPS will provide a small benefit for Transpower under Policy 4 since it will be in a stronger position to discourage third parties from compromising the efficiency of the network. Further, a medium benefit will occur for Policy 6, since third parties have reduced uncertainty on how electric and magnetic fields (EMF) issues will be dealt with under ICNIRP guidelines.

Councils

Policy and plans

Under the status quo, no information is held on average council costs. Under Policies 1 and 2, a one-off cost of $5,620,000 is expected for plan adjustment. This equates to $12,000 per regional council and $75,000 per district council.

Under Policies 3 and 4, a small increase in costs for councils is expected because of the confusion between what is written in district plans and what is written in the NPS. This is likely to incur some cost. Some small one-off costs may also be incurred by Policy 5 to identify transmission lines in district plans.

There is a medium benefit from Policy 6 because councils not only have an NPS but also guidelines to follow that can be added to the plan, thus reducing uncertainty and adding to clarity.

Consents

Under the status quo, no information is held on the total number of consents in an average year, although the processing cost is approximately $3,450 per consent and the average appeal is approximately $15,000.

Under Policies 1, 2, 3 and 4 a small benefit can be expected since those councils that require Transpower to obtain consent for all activities will now be required to consider the national importance and efficiency of the national grid. Under Policy 5 there is no change.

The benefit of Policy 6 for councils is at the planning stage. At the consent stage there will be a small cost associated with demonstrating how the guidelines apply at the local level.

Managing third parties

Under the status quo, no cost information is held on councils. Under Policies 1, 2 and 6 there is no change in costs. Under Policy 4 there will be a small cost because of the increased information requirements needed by interested parties as to how the NPS will affect them. Policies 3 and 5 in the NPS are not applicable.

Government

Policy development

Under Policies 1, 2, 3, 4, 5 and 6 there are costs in developing policy, although for Policy 3 the costs are sunk (ie, committed/spent).

Education and support

Under the status quo there are no costs. For all other policies a one-off cost of $200,000 is expected to be spread over the first three years.

Landowners

No information is held on the status quo costs in any of the categories for landowners.

Opportunity cost

Under Policies 1, 2, 3 and 5 the costs and benefits are expected to be nil. Under Policy 4 there are potential infringements of property rights for landowners who are constrained from developing their properties in a way that could compromise the efficient operation of the electricity transmission network, although, the location of transmission assets should be factored into the purchase price of the land - in the same way easements are for other properties. Further, the general principle of 'buyer beware' applies to purchasing property that is located close to transmission assets. There is a small benefit with the introduction of an NPS because it makes it clear that these development constraints exist.

Increased certainty will occur under Policy 6 because ICNIRP guidelines will be in place.

Plan advocacy

Plan advocacy is expected to have a small benefit for landowners under policies 1, 2, 3, 4 and 5. These benefits occur because the NPS makes Transpower's rights clearer on how the NPS applies in each district. Under Policy 6 increased certainty (because of ICNIRP guidelines) will assist landowners in their plan advocacy, so a medium benefit is expected.

Consents

Consent costs under Policies 1, 2, 3, 4 and 5 will be small. There is some small benefit because landowners' status under the NPS makes landowners' obligations clearer under the RMA. Increased certainty is likely to deliver a medium benefit under Policy 6.

Consumers

No information is held on the status quo costs in any of the categories for other interested parties.

Opportunities forgone

Under Policies 1 and 2 some benefit is expected for consumers, generators and other interested parties. This would be in the form of lower electricity prices and better utilisation of the network. Policies 3, 4, 5 and 6 will have no impact.

Participation

The participation costs will be small for Policies 1, 2, 3, 4, 5 and 6. Under all the policies, costs are expected because interested consumers, generators and others will have start-up costs associated with understanding how the NPS affects district plans (all of which have variable treatment of transmission lines).

Environment

Local adverse effects

Costs associated with the status quo are nil.

Under Policies 1, 2 and 3 there may be environmental costs, although the NPS will not preclude appropriate controls being in place to avoid, mitigate of remedy effects. Policies 4, 5 and 6 are not applicable.