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Farming power pylons feasible, report shows

Media Release
Until 11.00am 30 November 2009

Farming power pylons feasible, report shows

At the launch of an economic study conducted by the New Zealand Institute of Economic Research (NZIER), Federated Farmers is to ask the owner of Transpower to make the national grid operator offer annual payments for new transmission line infrastructure on private land.

“This is about fairness for new transmission line infrastructure going forward as some farmers are stuck with having to farm pylons,” says Philip York, Federated Farmers spokesperson on electricity.

“Our 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 key thing about the NZIER report is that it doesn’t open an overly expensive can of worms either. It also recognises the annual payment option may not be the best option in all circumstances and that some landowners may prefer settling for a single lump-sum payment.

“We’re not trying to re-litigate past legal agreements. This is about setting a positive course going forward that reconciles the best interests of landowners, with the need to upgrade New Zealand’s creaky transmission infrastructure.

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“Transpower is a state owned enterprise with a strong ‘for profit’ motive and farmers do respect that. Yet unlike private companies, Transpower has the upper hand in any negotiation as it enjoys compulsory acquisition rights.

“Transpower can negotiate easements from a position of strength, making this the least costly means of routing its transmission infrastructure from its own point of view. While it may be the least costly means of deploying transmission assets, that does not make it the most efficient for the economy as a whole

“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. We believe that could be addressed by reviewing the settlement after it is made and making an adjustment on that basis

“That’s why Federated Farmers commissioned NZIER. We wanted to see if there was a better way going forward and we believe that regularly reviewed payments are in fact the most efficient and equitable means. I think most Kiwis would agree that’s fair.

“Transmission infrastructure fundamentally affects what you can do with your land and therefore, the associated property right.

“We now ask the shareholder of Transpower, the Government, to intercede because regularly reviewed payments are a workable commercial solution. Transpower has commercial drivers and so do farmers. It’s not a massive cost in the scheme of things but may result in faster negotiations.

“We feel the NZIER report provides some compelling evidence for our argument that regularly reviewed payments are economically and commercially efficient,”Mr York concluded.


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