Million dollar fine for Auckland electricity lines company

Vector, an Auckland electricity lines company, has been fined $1,158,400 by Auckland High Court for breaches of network quality standards after action was brought by the Commerce Commission.

As a regulated electricity line business, Vector is only permitted a certain number of outages per year. The fine imposed by the High Court relates to the period between 2017 and 2020, with Vector exceeding the permitted number of outages in each of the four years.

Penalties are distributed for each year in which standards were not met, with the penalty for 2018 the highest. The fines for 2019 and 2020 were lower as Vector took remedial steps to improve service. However, these steps were too little, too late, to avoid further fines.

Associate Commissioner Vhari McWha said, “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.”

High Court Judge Justice Tahana took the same view, noting in her judgement, “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.”

The current price-quality regulatory regime took effect in 2009. Including the penalty laid down this week, Vector has been penalised twice for not meeting standards of service, having been fined $3,575,000 for breaching standards in the 2015/16 period. The only other electricity lines company to be penalised was Aurora Energy, which was fined $4,997,200 for breaching standards between 2016 and 2019.

A business is considered to fail to meet the quality standard if it exceeds the allowed number of outages in two out of three years, with Vector failing to meet standards for the years ending 31 March 2014, 2015, 2016, 2017, 2018, 2019 and 2020.

For failing to meet required standards in this seven-year period, Vector have been fined a total of just over $4.7 million. For the 2022 financial year, Vector reported a group net profit after tax of $160.9 million.