Vector facing ComCom charges

The Commerce Commission is taking Auckland electricity lines company Vector to the High Court for an alleged “excessive level of power outages”.

The commission says it’s seeking financial penalties against Vector for allegedly breaching its network quality standards, which it says includes failing to predict and plan for the effects of increased traffic congestion.

Vector has co-operated with the investigation and confirms it will not contest the proceedings, which relate to the 2015 and 2016 financial years, the commission says.

It expects to file proceedings on October 10 under the Commerce Act alleging Vector failed to adhere to good industry practice in some aspects of its network management, which resulted in increased outages over that period.

Vector serves more than half a million homes and businesses in the greater Auckland region and as a regulated business must comply with commission regulations regarding the maximum revenue it can collect and the minimum standards of quality it must deliver. Quality is measured in the duration and frequency of power outages, the commission says.

In particular, the commission considers Vector did not meet good industry practice with regard to aspects of its overall governance of compliance with the quality standards – for example, underestimating the growing risk of non-compliance, and failing to have methods to predict and plan for the effects of increased traffic congestion.

A fine of up to $5 million could be imposed per act or omission.

In a statement to the NZX, Vector says it’s agreeing on a settlement.

“The commission found that Vector breached this quality standard by 51 minutes in the 2015 regulatory year and 13 minutes in the 2016 regulatory year,” Vector says.

The outages are blamed on “increased storm frequency and other weather-related impacts, increases in Auckland’s traffic congestion which have slowed travel times and can prevent maintenance crews from reaching network faults in a timely fashion” and health and safety changes.

Vector’s chief network officer Andre Botha tells the NZX, “We understand the disruption these breaches have caused for some Aucklanders and we have been working hard on a range of measures to reduce the impact. However, we also believe the existing regime for quality control no longer reflects the reality of the changed operating environment, particularly in Auckland, and meeting these legacy quality standards will remain a significant challenge for ourselves and others in the industry.

“It is pleasing that we have been able to table these concerns with the Commerce Commission directly and we will continue to work constructively with them to determine new quality standards that will take effect on 1 April 2020 following the next regulatory reset process.”

The commission says a separate investigation will be held into Vector’s reporting of further breaches of its quality standards for 2017 and 2018.

As the case is now before the court, with a penalty hearing to follow, the commission says it is unable to comment further.

Vector is the second lines company to face court proceedings under section 87(1) of the Commerce Act for breaching quality standards since the present price-quality regulatory regime took effect in 2009. Proceedings against Aurora Energy were announced last month. A number of electricity lines companies have previously received warnings or signed settlement agreements for breaching their price-quality paths, the commission says.