Vector settles with ComCom on reliability breaches

Wednesday 10th October 2018

Vector has agreed a settlement with the Commerce Commission for breaches of its network quality standards in 2015 and 2016.

The company, the country’s biggest electricity distributor, said the breaches for those years also reflected increased storm frequency, slower response times due to increased Auckland’s traffic congestion, and the company’s decision to reduce live-line work as a safety measure.

“A penalty hearing will take place in due course at which the details of the settlement will be heard,” Vector said.

Neither Vector nor the Commerce Commission detailed the expected penalty. In August the firm told investors it was expecting a “materially lower final result” than the maximum $5 million that is available on each breach. The commission noted Vector’s cooperation in the latest process.

Lines companies regulated by the Commerce Commission are required to meet standards on the frequency and total time lost to network outages.

In Vector’s case, it breached its outage duration target by 51 minutes in the 2015 regulatory year and by 13 minutes in 2016. Breaches it reported for the 2017 and 2018 years are still being investigated.

The company believes the performance thresholds, toughened since 2016, don’t reflect the industry’s move away from live-line work and the impact that has on the time needed to carry out planned maintenance or to restore power after a fault. It also believes the pace of growth in Auckland and the level of congestion, are factors that should also be considered.

Vector formally asked the commission to review or ‘re-open’ the reliability standard in its default price path for the period through to 2020. Last month the commission said it was not likely to do so but sought feedback on that preliminary view.

While new health and safety legislation had taken effect in 2016, the regulator said the underlying obligation on distributors was to maintain and repair their assets according to industry best practice. Accordingly, it felt the legislative change did not meet the strict rules for when it could adjust lines companies’ performance standards.

In the proceedings filed in the Auckland High Court today, the commission claims that Vector had not met good industry practice for vegetation management, supervision of field crews and asset life-cycle management.

The regulator said the firm had also underestimated the growing risk of non-compliance, and failed to have methods to predict and plan for the effects of increased traffic congestion.

(BusinessDesk)

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