Transpower may have to pay compo to 34,000 homes for August power cuts

Wednesday, 27 April 2022

Energy Minister Megan Woods responds to the power cuts in August, 2021,ahead of the subsequent inquiries into the incident.

Transpower could be ordered to pay compensation to tens of thousands of households who had their power unnecessarily cut off on one of last winter’s coldest nights.

However, it appears the total amount of any compensation would be capped at $200,000.

The Electricity Authority on Wednesday confirmed its view that the national grid operator could be blamed for power cuts on August 9 that left 34,000 homes, mostly in the central North Island, without electricity for a few hours.

The authority said “coordination and communication failures” at Transpower resulted in power users being disconnected during what was a night of tight electricity supply, confirming and adding to criticisms of Transpower made in earlier reports.

* Electricity Authority blasts Transpower for role in August power cuts

* Power cut blame: Transpower to be scrutinised first, 'then wider issues'

Electricity Authority chief executive James Stevenson-Wallace said Transpower had improved its communication tools and processes since the power cuts.

But the regulator has nevertheless decided to lay a complaint with the independent electricity Rulings Panel, whose members are picked by the Government, over alleged rule breaches by Transpower.

“If a complaint is upheld, the panel can impose penalties, award costs or compensation and recommend code amendments,” the authority said.

The authority confirmed that legislation allowed the Rulings Panel to order power companies including Transpower to pay penalties “and/or a sum by way of compensation to any other person”.

But it said regulations meant Transpower could not be liable for more than $200,000 “in respect of any one event or series of closely-related events arising from the same cause or circumstance”.

Transpower chief executive Alison Andrew has indicated “the wider industry” and the Electricity Authority itself also have work to do to reduce the risk of future power cuts.

“This means that the system operator’s potential liability in respect of this complaint across all orders is limited to $200,000,” it said.

The authority said it did not wish to comment further as the matter was before the Rulings Panel.

Some of the blame for the August power cuts was initially laid at the door of Genesis Energy, amid suggestions it might have contributed to a power shortage on the day by withholding generation.

But it soon emerged that warning notices issued by Transpower did not specifically request generators increase their power offers until shortly after 1pm on the day of the power cuts, by which time it was essentially too late for Genesis to fire up its coal turbines to meet the peak evening demand.

Transpower also botched calculations of how much lines companies needed to drop their power demand on the night to prevent an even wider outage.

That resulted in lines companies cutting off power to homes when that was not necessary.

The authority added to its criticisms of Transpower in its new report, saying some of its failures were similar to others than had been previously identified at the company, that its internal communications were “unclear and informal”, and that it had not provided sufficient training to its control room staff.

Transpower chief executive Alison Andrew said it was considering the authority’s latest report, but indicated in a statement that others, including the authority itself, also had work to do to avoid a repeat.

“There is still more work to be done by Transpower, the wider industry and the authority itself to address the issues on both the demand and supply side to ensure that a similar event does not happen again,” she said.

“We remain committed to doing our part so that New Zealanders can continue to receive the reliable electricity they have come to expect.”