Thursday, 18 February 2010

Coase when transactions costs are high

The Government is looking at ways to help break the impasse between Transpower and South Island landowners seeking compensation for pylons on their land, but is disappointed threats are being made, Energy and Resources Minister Gerry Brownlee says.

The South Canterbury landowners say they are frustrated that four years of negotiations have failed to result in what they consider fair compensation for use of their land.

Major upgrade work on the Roxburgh-Islington line is almost complete, but critical maintenance work is still to be done on the foundations of about 20 pylons.

Transpower said landowners had been offered "easement" payments which were taken up by some. Negotiations with others has stalled and some farmers have closed their gates to the company for everything but emergency work until they get what they consider a satisfactory outcome.
I wish I knew more about the history of these disputes. I can imagine a scenario where the government used eminent domain to put up the pilons in the first place, but then handed off the assets to a state owned enterprise that had to negotiate ongoing access rights with the landowners who were still aggrieved about the initial expropriation. Is that what happened? None of the reporting I've seen on the disputes goes far enough back; I suppose it's part of the stock of assumed common knowledge to which foreigners like me aren't party.

Note that the stakes are relatively high - a big power outage in Auckland arguably was caused by Transpower being unable to come to agreement with a farmer about being able to get access to the lines for necessary tree trimming.


  1. There's an NZIER report on this.

    "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% of all lines), and easements or similar rights for lines constructed post 1988.4 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.5",66301/66301_Compensation_for_transmission_infrastructure_final_report.pdf

  2. That looks really interesting; thanks!