Compensation for transmission infrastructure
Released 30 Nov 2009
Background
New Zealand electricity is generated at hydro, thermal, geothermal and wind power stations scattered throughout the North Island and hydro and wind power stations in the South Island. Load is at highly populated areas, generally in the North Island while generation capacity is in lightly populated areas, with hydro storage mainly in the South Island. As a consequence there is approximately 12,000 kilometres1 of transmission infrastructure in New Zealand linking generation capacity and storage with commercial, industrial and residential end users. The majority of transmission towers and lines are on and over private property, predominantly land used for farming.
Transpower was established as a State Owned Enterprise in 1987 to own and operate the national electricity transmission grid, having been mandated the responsibility of transmitting electricity in New Zealand. Transpower ownership of and access to transmission infrastructure on private land is covered under statutory provisions, in effect an eminent domain3 for lines built prior to 1988 (about 95 percent of all lines), and easements or similar rights for lines constructed post 1988. Pre 1988 infrastructure was built by the public sector with rights of ownership and access transferred to Transpower in 1988. Transpower's rights to both pre and post 1988 infrastructure include ownership or, where it does not own land, access for inspection, operations and maintenance. These rights bind successive title holders.
NZIER REPORT LAUNCH
At the launch of an economic study conducted by the New Zealand Institute of Economic Research (NZIER), Federated Farmers will ask the owner of Transpower to make the national grid operator offer annual payments for new transmission line infrastructure on private land. This campaign is about fairness for new transmission line infrastructure going forward as some farmers are stuck with having to farm pylons.
Federated Farmers optimum solution going forward is for Transpower to offer market based payments reflective of location and land use. Regular valuation reviews will ensure landowners now and into the future get compensation for the loss of operational freedom on their own land. For example, should urban encroachment see residential areas increase the value of land, this should be reflected in the payment the landowner receives. Similarly, if the asset is on some hillock in the back of beyond, then payments would reflect that too.
The NZIER says the problem starts with the valuation and assessment process right at the start. In fact, in some cases, costs could be understated. Federated Farmers commissioned NZIER to see if there was a better way going forward and believe that regularly reviewed payments are in fact the most efficient and equitable means. We think most Kiwis would agree that's fair.
