NZIER report on compensation for transmission infrastructure
NZIER report on compensation for transmission infrastructure
NZIER report on compensation for transmission infrastructure
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<strong>for</strong> four different land uses (<strong>for</strong>estry, dairy, crops, sheep / cattle farming)<br />
valuati<strong>on</strong>s of each land type in 20 regi<strong>on</strong>s of New Zealand<br />
average labour cost of $3,000 per valuati<strong>on</strong> 30<br />
Operati<strong>on</strong>al cost reappraisals every fifth year:<br />
$15,000, based <strong>on</strong> what <str<strong>on</strong>g>NZIER</str<strong>on</strong>g> understands, from its own experience<br />
commissi<strong>on</strong>ing and undertaking surveys, the market price to be <strong>for</strong> designing<br />
and undertaking a short survey of farm managers and other experts<br />
5.1.3 Dispute costs<br />
The percepti<strong>on</strong> of fairer compensati<strong>on</strong> <strong>for</strong> easements, under an annual compensati<strong>on</strong><br />
scheme, is assumed to reduce the number of disputes and shorten the time needed<br />
to resolve disputes that do arise. The net impact <strong>on</strong> dispute costs will depend, in part,<br />
<strong>on</strong> landowner support <strong>for</strong> any changes. Fewer disputes will reduce the litigati<strong>on</strong> costs<br />
to Transpower and landowners, and reduce the amount of time required to complete<br />
transmissi<strong>on</strong> <strong>infrastructure</strong> projects. 31<br />
We assume that <strong>on</strong>e in twenty landowners approached by Transpower currently<br />
disputes the easement process and that this will reduce to <strong>on</strong>e in fifty. For modelling<br />
purposes we have based our assessment <strong>on</strong> the Whakamaru to South Auckland grid<br />
project which crosses 314 properties. 32 Disputes are assumed to currently take three<br />
years to settle <strong>on</strong> average, reducing to <strong>on</strong>e year with the annual payment opti<strong>on</strong>. We<br />
assume two new disputes <strong>on</strong> average per year in perpetuity post the Whakamaru<br />
project reducing to <strong>on</strong>e per year with annual payments.<br />
Costs of <strong>on</strong>-going negotiati<strong>on</strong>s:<br />
Transpower labour cost of $16,900 per year per dispute based <strong>on</strong> <strong>on</strong>e m<strong>on</strong>th<br />
of in-house counsel labour costs and <strong>on</strong>e m<strong>on</strong>th of support staff labour costs<br />
travel costs of $1,200 per year per dispute based <strong>on</strong> the cost of return flights<br />
and the requirement that Transpower representatives attend two meetings<br />
away from Wellingt<strong>on</strong> <strong>for</strong> each dispute each year<br />
landowner time cost equivalent to $10,000 per year per dispute based <strong>on</strong><br />
labour costs of landowners preparing <strong>for</strong> and attending meetings and any legal<br />
or other professi<strong>on</strong>al advice purchased<br />
5.1.4 Uncertainty costs<br />
If Transpower shift to periodic from lump-sum payments it will face more uncertainty<br />
about the final amount to be paid in easement compensati<strong>on</strong>. It may want to discount<br />
the price accordingly, depending <strong>on</strong> its risk assessment and risk preference.<br />
30 Tim Cright<strong>on</strong> pers<strong>on</strong>al communicati<strong>on</strong>.<br />
31 The <strong>for</strong>estry issue of liability is not addressed by shifting from lump-sum to annual payments so<br />
<strong>for</strong>estry disputes costs are assumed to be the same under both opti<strong>on</strong>s.<br />
32 Electricity Commissi<strong>on</strong> of New Zealand website.<br />
<str<strong>on</strong>g>NZIER</str<strong>on</strong>g> – Compensati<strong>on</strong> <strong>for</strong> transmissi<strong>on</strong> <strong>infrastructure</strong> 40