Vector must pay $3.5m for too many power cuts after Commerce Commission action

A Vector line worker replaces blown circuit breakers on a power line. Photo / Greg Bowker

Vector has been ordered to pay $3.5 million for historic ''excessive levels'' of power cuts and could face further penalties for more recent breaches.

The High Court has found the lines and gas company didn't adhere to good industry practice, meaning it failed to meet quality standards.

The penalty imposed today relates to power cuts in 2015 and 2016 but in the subsequent two years the company also exceeded the annual limit set for the number and duration of outages.

Depending on what culpability Vector has, this could lead to further penalties following action brought by the Commerce Commission.

"Auckland consumers have a right to expect a good quality of service from their lines company and Vector failed to deliver it," said the commission's deputy chairwoman, Sue Begg.

Vector has now exceeded its annual reliability assessment for the years ending March 31, 2014, 2015, 2016, 2017 and 2018.

Vector is the first lines company to incur a financial penalty under the Commerce Act for breaching its quality standard measured in the duration and frequency of power outages.

The company has more than 500,000 customers 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.

An analyst at Forsyth Barr Andrew Harvey-Green said while the penalty was not material, it wasn't a good look for the company.

And it was possibly a precedent for the fine that it may get following 2017 and 2018 breaches.

In her judgment, Justice Alisa Duffy noted said they were ''serious contraventions'' by what was the biggest electricity distributor in the country.

''The size of the contravening party is an important factor in determining the seriousness of the contraventions. This is because any penalty must take account of both the size and resources of the party, and the effect on its customers,'' she said.

Among factors leading to Vector's failings noted by the judge were:

• Not planning for the foreseeable increase in traffic and allocating work crews to ensure a fast response.

•Aspects of life cycle asset management failing to meet good industry practice

•Not having a sufficiently holistic and agile asset management approach

•Failing to meet good industry practice for vegetation management

The penalty imposed by the court was discounted by 35 per cent for mitigating factors, including Vector agreeing not to contest the proceedings.

Begg said the commission was aware of reports asserting these proceedings stemmed from changes to Vector's "live lines" safety policies, which was incorrect.

''Vector was in breach of its quality standard regardless of that policy change and we took these proceedings because of the concerns we had with Vector's overall decision-making and management practices.''

Vector's chief network officer Andre Botha said the company acknowledged the inconvenience power cuts caused customers.

"We are constantly evolving our business to meet Auckland's significant growth though ongoing investment decisions that improve long-term outcomes for customers and improve the performance of Vector's network,'' he said.

Vector is 75 per cent owned by a community trust and in the past six months made a profit of $83.3 million up from $79.0m in the prior period.