Transpower planning and development manager David Boyle gave evidence on behalf of the Crown, which has lodged an all-of-Government submission in support of the Central Otago development.
Mr Boyle said, when determining possibilities for transmission upgrades, Transpower looked at what would result in the lowest possible cost to consumers.
However, in the end, the cost of electricity would increase.
Costs taken into account when making cases for transmission investment included the physical cost of transmission, property, project management, environmental expenses, as well as ongoing fuel and maintenance costs, Mr Boyle said.
Transpower was considering a transmission upgrade for the lower South Island which took into account the possibility of Project Hayes receiving consent alongside TrustPower's $400 million Mahinerangi wind farm, he said.
Together, the two wind farms would be capable of generating up to 830MW a year.
Included in Transpower's economic assessment of possible upgrades in the lower South Island were 26 transmission options, he said.
"The purpose of the economic test is to determine the lowest cost of generation, to try to get the lowest cost to the consumer."
Transpower expected to make its case for the transmission upgrade to the Electricity Commission early next year, after which it would take several weeks for a final decision to be made, Mr Boyle said.
An initial upgrade capable of linking an extra 600MW to the national grid each year could cost about $40 million.
