With much of the electricity transmission network in Scotland in need of replacement or improvement to cope with the increased volumes of electricity being transmitted from renewable energy sources, there are a significant number of upgrades taking place throughout Scotland.

This is turn means that farms, estates and other rural businesses are regularly being approached by power companies looking to install or upgrade equipment on their land.

Land rights

Whether constructing new power lines, or upgrading existing infrastructure, power companies require "land rights" to carry out these works. For new lines, this will almost certainly require new rights from the owners and occupiers along the route.

For upgrades, there will often be existing documentation in place, and depending on the circumstances, this may or may not permit the proposed works, or indeed the operation of the line at a higher voltage.

Statutory powers

Whilst power companies usually seek to secure rights on a voluntary basis, they have statutory powers to secure these rights by compulsion and voluntary negotiations often run in tandem with statutory processes.

With programmes to meet, and to avoid delays if voluntary agreements cannot be reached, a process for compulsory acquisitions will often be running at the same time.

The Electricity Act gives licence holders the power to compulsorily acquire land and rights in land. This power might be used, for example, to purchase land required for a new substation, or for a servitude right of access to it.

The Electricity Act also gives licence holders the power to acquire "necessary wayleaves". This statutory form of wayleave permits the installation and retention of electric lines and ancillary apparatus. The key distinction between a necessary wayleave and a negotiated wayleave is that a necessary wayleaves runs with the land and bind successors for the period specified in the wayleave.

What sort of documents might you be asked to sign?

Wayleave agreements (voluntary)

First of all there are voluntary, or negotiated, wayleave agreements which typically provide for an annual wayleave payment to be made to the owner or occupier as long as the line remains in place.

These are essentially personal agreements between the parties and will usually fall when the land is sold or otherwise passed on.

Wayleaves were historically the document of choice, but more recently there has been a move towards Deeds of Servitude in exchange for a capitalised payment.

Deeds of Servitude

Servitudes create a real right in property, rather than just a contractual right. As such, servitudes offer greater protection and security to the power companies as the rights do not fall on change of ownership.

From an owner's point of view, a servitude may also be more attractive as it will usually command a higher compensation payment and, in practical terms, may make little difference to the owner whether a wayleave or servitude is granted given the statutory protections afforded to the infrastructure once it is in place.

Leases/licences

Wayleaves and servitudes tend to be used for pylons and electric lines.

It is more common to see Leases or Licences used for construction compounds, laydown areas and welfare facilities where exclusive possession for a shorter period is required.

Options/consent forms

Power companies often look to secure the rights they require in advance by entering into an option agreement with the owner in exchange for an option payment.

This will typically be based on a percentage of the agreed compensation with the balance to be paid on completion of the grant of a Deed of Servitude when it is required.

This allows the power companies to secure the rights they require whilst they obtain required statutory consents, allowing them to proceed quickly with the works once the consents are in place.

Option agreements also typically allow for access to be taken in the intervening period for site investigations and other surveys.

Consent forms are less formal than option agreements but are often contractually binding, requiring the grant of a standard form wayleave or servitude at a later stage, and so should be considered carefully.

Negotiate terms

Whatever form the documentation takes, owners and occupiers should ensure that it adequately protects their interests and that they will be fairly compensated.

The standard form documents used by power companies are usually weighted in their favour giving them all the rights they require but without important protections for the landowner or occupier.

Signing up to any of these documents will have important legal consequences and it is crucial that owners and occupiers fully understand the implications of this before proceeding.

Contributor

Scott Logan

Legal Director