Assessing the compensation for electricity wayleaves
| Date | 01 May 1999 |
| DOI | https://doi.org/10.1108/14635789910258525 |
| Pages | 176-191 |
| Published date | 01 May 1999 |
| Author | Norman Hutchison,Andrew Cameron,Jeremy Rowan‐Robinson |
| Subject Matter | Property management & built environment |
JPIF
17,2
176
Journal of Property
Investment & Finance,
Vol. 17 No. 2, 1999, pp. 176-190.
#MCB University Press, 1463-578X
Received 6 October 1998
ACADEMIC PAPERS
Assessing the compensation
for electricity wayleaves
Norman Hutchison
Department of Land Economy, University of Aberdeen,
Andrew Cameron
Department of Forestry, University of Aberdeen, and
Jeremy Rowan-Robinson
Department of Law, University of Aberdeen, Old Aberdeen, UK
Keywords Compensation, Electricity
Abstract This paper examines the measure of compensation payable for electricity wayleaves
through afforestation and considers the merits of using a discounted cash flow approach to
calculate the level of compensation. The research finds that the majority of negotiations take place
``under the shadow'' of compulsory powers and that the measure of compensation is based on the
principle of equivalence; the compensation payable being the loss to the landowner and not the
gain to the electricity supply company. It concludes that great caution is needed when applying a
discounted cash flow approach to the valuation of afforestation owing to the large number of
inputs and the sensitivity of the estimated land value to changes to key variables such as the
discount rate and tree species.
Introduction
Recent years have seen a proliferation of statutory provisions for wayleaves.
The list of organisations requiring wayleaves such as the sewer, water, gas,
electricity and telephone companies have now been joined by cable TV, and
other telecommunications providers, such as Cellnet and Vodaphone, to form a
very long list of potential promoters. The compensation for wayleaves is a
much neglected area but one that deserves consideration in the light of the
privatisation of a number of the utilities. This paper takes electricity wayleaves
through afforestation as a case study. Afforestation has been chosen because it
raises issues of compensation in their most complex form.
Electricity wayleaves are problematical in relation to forestry because the
physical height of trees preclude their presence near electricity cables thus
creating a clear area of ``sterilised'' land. By comparison, most agricultural
activities can usually continue with limited interference beneath the lines. In
the past wayleaves were largely accepted by forest owners as a necessary
inconvenience and compensation was primarily paid on a notional basis.
However, attitudes of landowners towards compensation for the loss of future
earnings from forestry due to wayleaves, have hardened in recent years
highlighting the need for a reappraisal of the way the compensation is
The financial assistance of Scottish Hydro-Electric is gratefully acknowledged.
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