"Climate change is here and unfortunately, we are going to have more outages as a result, Vector chairman Michael Stiassny told shareholders. Image / Vector AGM webcast.
"Climate change is here and unfortunately, we are going to have more outages as a result, Vector chairman Michael Stiassny told shareholders. Image / Vector AGM webcast.
Departing Vector chairman Michael Stiassny offered a bleak prediction at his company's annual meeting in Auckland.
"Climate change is here and it is affecting the way storms and weather impacts on our systems," he told shareholders.
"Unfortunately, we are going to have more outages as a result."
Vector chief executive Simon MacKenzie weighed in that the storm that hit Auckland in April was "one of the worst in decades." He called it the "hurricane with no name" on the basis that it saw winds that peaked at 215km/h - on a par with Hurricane Florence that hit the south-east US in September.*
The April storm, which saw extended power outages suffered by more than 100,000 Auckland households, was evidence of the rising impact of climate change, MacKenzie said.
Angry investor Coralie van Camp told the Vector bosses that was no excuse.
"I know there was a storm, but you've been aware of climate change for a very long time. And it wasn't terribly long ago Mr Stiassny that you told us quite arrogantly to prepare for power cuts - and you had batteries at home so you were okay sitting at home watching TV," she said.
If UFB fibre could be put underground by Chorus, van Camp said she didn't see "why you can't increase your undergrounding to protect old areas like Epsom and Remuera from the damage from these storms. You really need to look more closely at security of supply."
Vector chief executive Simon MacKenzie said Aucklanders were already well off for undergrounding, relatively speaking. Some 55 per cent of the city's power lines were underground and the percentage was increasing as new subdivisions were built with underground cables.
He said that compared well to 27 per cent in New Zealand as a while, and 35 per cent in Sydney.
But undergrounding existing lines was not necessarily the way to minimise storm damage he said.
For starters, he said the exercise would cost an estimated $5.5 billion, equating to an increase in the average household's line charges component of their power bill from $700 to $1570 per year.
That would be a tough sell "at a time when everyone's not that happy with the cost of electricity as we see from the current electricity price review," the Vector boss said.
Six months after it got failed during the April storm, then suffered a data breach, Vector's outage-tracking app is still being re-tooled.
MacKenzie added that undergrounding has several drawbacks.
"Repair times are substantially longer for underground, and undergrounding cannot ensure resilience against flooding, earthquakes, volcanic eruption or even trees falling in strong winds and uprooting buried services," he told the meeting.
Vector could be better off spending its money on alternative solutions such as "facilitating faster takeup of distributed energy resources such as solar and battery and using real-time network performance data from smart meters and delivering microgrids to serve remote or isolated communities better."
He said it was also possible that electric vehicles could be harnessed as mobile power sources during storms.
In the immediate term, however, Vector was pursuing more low-tech solutions.
Regulations that stopped lines companies from cutting trees to more than half a metre from a power line had to change, he said. Lines companies had been requesting a change for years, but an MBIE review would not start until 2019, he said.
Falling trees and branches from the April 10 storm knocked out power to about 100,000 Auckland properties at its peak. Photo / Alison Murray
Worsening Auckland traffic also copped some of the blame for service problems. While emergency services can turn on their sirens and bypass congestion, Vector crews have to sit in traffic, MacKenzie said.
Vector was also working to improve communication with customers during storms (its outage app froze during the April storms, as well as suffering a data breach. As of today, it's still offline).
The lines company was also doing "preliminary work with retailers to allow access to meter information, which was one of the main challenges we faced in identifying individual faults as opposed to wider network faults after the April storm," MacKenzie said.
Blame was also placed on the Commerce Commission, with the Vector boss claiming that "forecasting errors" around inflation and power demand had led the watchdog to cap the lines company's regulated earnings at too low a level - costing it $28m a year, he said.
MacKenzie also said Vector's decision to stop crews working on live power lines - in keeping with new health and safety legislation - had seen it struggle to meet Commerce Commission quality-of-service guidelines, which were based on the lines company's historic performance.
The ComCom hasn't bought Vector's various explanations. On October 10 it filed a prosecution in the High Court under the Commerce Act, alleging an "excess level of power outages" during Vector's 2016 financial year. Vector didn't contest the charge (a penalty has yet to be set; it could run to millions) and indicated it had also informed the regulator of breaches of quality standard guidelines for 2017 and 2018.
Majority investor Entrust is also disgruntled. On Friday it forced the resignation of two directors aligned with Stiassny and the meeting saw two Entrust-aligned directors elected. Stiassny, who was taking the chair for the final time after the breakdown of his relations with Entrust, closed the meeting with an attack on the consumer trust for waging what he called a "vendetta" that was more about personality politics than the best interests of Vector and its network.
His message did not resonate with the audience or the wider community of Vector shareholders, who voted overwhelmingly for the Entrust-aligned candidates.
* For MetService, the April storm was a "hurricane with no name" because it was not a hurricane.
"The storm that caused this event in Auckland did not have the characteristics of a tropical cyclone or hurricane," GM Meteorological Operations Ramon Oosterkamp says.
"Records show that at the Manukau Heads observation station, there was a single gust of 213 km/h. Because of its siting and high elevation, wind data from the Manukau Heads station are not considered representative of the Auckland region when the wind is from the northwest direction. At MetService observation stations in the wider Auckland area, during the period of strongest winds on 10 April, maximum gusts were typically 130-160 km/h."
Whether it was the worst storm in decades depends on your criteria, the MetService man says. In many areas, stronger gusts have been recorded within the past 10 years.
In terms of Vector's statement that climate change would increase the frequency of severe storms, Oosterkamp pointed the Herald to the Ministry for the Environment's "Our atmosphere and climate 2017" report, which states "Projections indicate climate change may alter the occurrence of extreme wind events, with the strength of extreme winds expected to increase over the southern half of the North Island and the South Island, especially east of the Southern Alps."
