Vector penalised $1.1m for ‘excessive’ power cuts

Auckland electricity lines company Vector has been hit with a $1,158,400 penalty in the Auckland High Court for breaches of network quality standards – relating to “excessive power outages from 2017 to 2020”.

The action was brought by the Commerce Commission which says that as a regulated business under the Commerce Act Vector must comply with price-quality regulation that sets limits on the total revenue it can earn, as well as the level of power outages that can occur on its network.

As part of its reporting obligations, Vector disclosed to the commission that it contravened its quality standards for each of the years from 2017 to 2020.

While Vector had taken measures to address its previous non-compliance with the quality standards relating to outages, it had failed to adhere to good industry practice by taking those steps too late to prevent the contraventions in the 2017 to 2020 years, says associate commissioner Vhari McWha.

“Auckland consumers have the right to expect a good quality of service from their lines company and Vector did not implement measures to deal with its network reliability as early as it should have,” she explains.

“Given the impact electricity outages can have on consumers and businesses – from loss of perishable items, heating and hot water through to staff downtime and loss of revenue – it is crucial that lines companies have the systems in place to identify and manage the risks present in their networks.”

The penalty amount imposed by the High Court was jointly recommended by the commission and Vector, with the penalty for the 2018 year the highest, reflecting the fact that the extent of outages was greatest in this period, while the penalty for the 2019 and 2020 years was lower, accounting for the fact that most of Vector’s remedial steps occurred during this period, the commission adds.

“The issue with Vector’s conduct is that it could have acted faster than it did in addressing the issues that gave rise to the contraventions,” says Justice Tahana in her recently released judgement.

The penalty imposed by the court was discounted by 36% for mitigating factors, including Vector’s co-operation with the commission’s investigation process.

Once a penalty has been imposed, section 87A of the Commerce Act allows any person who has suffered loss or damage as a result of the breach to bring a further claim for compensation against Vector within 12 months of this penalty decision from the High Court, the commission explains.

Vector says it’s pleased historic breaches in network quality standards from 2017 to 2020 are now resolved, following proactive engagement with the Commerce Commission.

“Our ongoing focus on improving reliability has seen us comply for the 2021 and 2022 regulatory years,” says Vector Group chief executive Simon Mackenzie.

“This reflects a huge and continued effort by our staff and our field service providers to manage the challenges of Auckland’s significant growth, whilst also investing in network reliability and performance.”

Vector says it invests about $7.5 million weekly, or more than $300m annually, to maintain and expand the network to support Auckland, make sure the region’s electricity infrastructure can enable decarbonisation goals, and is resilient in the face of climate change and extreme weather events.

It explains Auckland challenges include the city’s continued growth, adaptation for climate change impacts, traffic congestion, and vegetation impacting lines resulting in customer outages as seen extensively in Cyclone Gabrielle.

“The latter highlights the need for urgent tree regulation,” says Vector.

“We also note the decision from the courts highlights the challenges of having to adjust for new health and safety practices plus our constructive engagement with the commission.”

A judgment copy will be available on the commission’s website.