Transpower owns and operates New Zealand's high-voltage electricity transmission grid and sought permission from the Electricity Commission for an upgrade to lines between Roxburgh and the Waitaki Valley.
The commission held a conference at Alexandra in June to hear submissions, and was told by two groups of farmers the $4.9 million Transpower had allocated to compensate land owners was insufficient.
In its decision, released yesterday, the commission approved the proposal and said Transpower could recover the cost, up to $170 million.
Transpower's grid development general manager, John Clarke, welcomed the decision and said construction would probably begin in 2012, once the design work was finalised.
The costs would be passed on to lines companies and generation companies throughout the country but he did not expect domestic power users' charges to increase as a result.
"Transmission costs are less than 10% of a domestic consumer's power bill and even when this cost is factored in, it will still be about 10%, which is a relatively small proportion."
"The Electricity Commission has given us permission to spend this money and to recover it from all of New Zealand."
The investment would return $335 million worth of economic benefit to the country and cater for potential wind and hydro generation projects in Otago and Southland.
Oturehua farmer Ken Gillespie, a spokesman for the Roxburgh to Duntroon Landowners' Group, had not had a chance to read the commission's decision yesterday, but was not surprised by the outcome.
"We're still talking to Transpower and we'll continue to talk to them.
"There's no suggestion that farmers here are likely to hold them to ransom. We're not that militant."
Farmers still wanted compensation, on a long-term basis, for the effect power lines and pylons had on their farming operations.
"That still needs to be addressed and we'll continue working away on that," Mr Gillespie said.
The commission said the landowners' group and Coal Creek farmer Gerry Eckhoff, who represented eight Roxburgh farmers, submitted the cost of the project should include greater compensation for landowners.
Farmers claimed the value of their properties had lowered because of the existing transmission lines across the land.
The commission said it could not take that into consideration, as that expense was incurred by people in their capacity as property owners, rather than as power consumers.
The cost of the proposal to power consumers was a factor that could be considered by the commission.
Mr Eckhoff raised concerns about whether the upgrade would double the health risk for neighbouring property owners but the commission found the exposure to electromagnetic fields would comply with international guidelines.
Contact Energy Ltd, Mighty River Power Ltd, Meridian Energy and the New Zealand Wind Energy Association all supported the upgrade proposal.
Grid upgrade
• Upgrade of 350km of existing lines, increasing capacity.
• Five sections of line between Roxburgh and the Waitaki Valley.
• Will cost up to $170 million in 2009 dollars.
• Approval given for Transpower to "recover costs".
• Four-year project, construction to begin 2012.
• Project will provide security of supply.
• Caters for potential wind and hydro development.
