7 Jul 2017

Power company admits overcharging thousands of customers

7:03 pm on 7 July 2017

Auckland power company Vector has admitted overcharging thousands of its customers.

powerlines

Photo: 123rf

In a new settlement announced today, the Commerce Commission said Vector would reduce the amount of revenue it earned by nearly $13.9 million, starting next year in April.

It said the power company overcharged nearly 30 percent of households between 2014 and 2015.

The commission said Vector agreed to earn less revenue and keep some residential power prices the same for the next two years instead of going through the courts.

The commission said it accepted that Vector did not intend to breach its regulated price path when it restructured its residential tariffs in 2013.

Vector restructured its prices for residential customers into low-user and standard user, but it fell to electricity retailers to identify Vector customers and switch them to the most appropriate tariffs under the restructured prices.

In setting prices for the two tariffs, Vector assumed that competition in the electricity retail market would ensure that virtually all residential customers would be switched to the most appropriate rate from the first day, said the commission.

However, at the end of the first year of the new price structure, 28 percent of Auckland households had still not been switched to the tariff that was appropriate for their circumstances and so were paying more than they needed to.

Commission deputy chair Sue Begg said Vector should not have assumed that users would all be immediately transferred by electricity retailers to the best rate.

The chief executive of Consumer New Zealand, Sue Chetwin, said Vector should have known better.

"This is not the first time a lines company has been pinged by the Commerce Commission, so I think they do have to be careful in their pricing, I mean they are monopolies."

Vector delivers electricity to more than 500,000 homes and businesses in the greater Auckland region.

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