NZIER report on compensation for transmission infrastructure

The remainder of the literature review looks at the two equity related factors listed in
the problem definition:
Payment formulas and timing
Splitting an easement surplus.
We finish the review with a brief summary of what the literature says about
negotiating strengths.
3.2 Land access and the basis of compensation
3.2.1 Utilities’ rights to land
Transmission companies tend to seek land access rights which reflect both the
permanence of their infrastructure and their only occasional need to access it.
Utilities in the countries we considered usually purchase the land they need and
create new rights (typically easements) so they can build and access infrastructure
and run lines and pipes. Many governments have deferred powers of eminent
domain or compulsory purchase to utilities in recognition of the importance of such
infrastructure (see, for example, Viitanen and Kakulu 2009, Nuuja and Viitanen 2007
or Hutchison and Rowan-Robinson 2000).
Governments typically try to balance the need for transmission and similar
infrastructure with the rights of individual landowners. Utilities are generally required
to negotiate with landowners before exercising compulsory purchase powers, and
are required to compensate the landowner when land is taken. Compensation is
usually based on the financial equivalence of the landowner‟s loss (see, for example,
Hutchison and Rowan-Robinson 2000).
3.3 Efficiency
3.3.1 Equivalence of loss
Equivalence of loss compensation is payment equal, in theory, to the cost imposed
on the landowner from having infrastructure on their land. This includes the cost from
loss of productive land, increased operational expenses and damages from
construction.
The principle of equivalence of loss is embedded in legislation in all of the countries
we looked at. The New Zealand Public Works Act 1981 states that the landowner is
entitled to full compensation for acquisition, taking, injurious affection, or damage. 13
The English Compulsory Purchase Act 1965 states that compensation should be
awarded for loss of land value and for injurious affection (in Hamer and O‟Brien
2000). In Finland compensation is based on assessing and compensating for all
economic losses suffered (Act on the Redemption of Immovable Property and
Special Rights 1977 in Nuuja and Viitanen 2007).
13 Public Works Act 1981 http://www.legislation.govt.nz/act/public/1981/0035/latest/DLM45427.html
<strong>NZIER</strong> – Compensation for transmission infrastructure 18