Alpine Energy says it won’t raise prices to cover overcharged credits
Thursday, 10 April 2025
Customers impacted by Alpine Energy’s historic overcharging will be credited, but dividends to shareholders are unlikely to be paid until at least 2027.
On Wednesday, the Commerce Commission confirmed the South Canterbury-based lines company would not be charged over the accounting error, but had been issued a warning and told to refund customers to the tune of $16.9 million.
The company was also ordered to spend at least $1.5m to support access to electricity in the South Canterbury community within two years.
The Commission launched an investigation after the historic overcharging error, which saw customers pay more for their lines component of power bills, and was discovered and reported in August 2023. However, the company did not inform its customers until more than eight months later, in April 2024.
Commissioner Vhari McWha said the commission’s focus was on ensuring Alpine Energy returned the money it had overcharged customers with additional funds committed in recognition of the harm the error caused the wider community.
“We’re mindful that, given electricity is an essential service, consumers may have suffered unnecessary hardship as a result of this error,” McWha said.
“That’s why in addition to paying customers back the amount they are owed, we have secured a commitment from Alpine to spend at least $1.5 million to support access to electricity in the local South Canterbury community.”
Alpine Energy said all of its customers would be entitled to a credit, and the amount of each credit would depend on the type and size of the customer. Households would receive $261.69, and customers on three-phase connections $992.83.
While customers could expect credit, shareholders were unlikely to see dividends in the near future, Alpine Energy chairperson Melissa Clark-Reynolds said.
“We quite possibly won’t be able to pay dividends for a couple of years.
“Our cash flow is going to be seriously constrained … and last year we couldn’t pay them because the uncertainty was so high because we didn’t understand what we were going to owe,” Clark-Reynolds said.
“That’s not something any chair wants to have to tell the shareholders, that we don’t think we can give you dividends for a couple of years.”
Timaru District Holdings Limited (TDHL) holds a 47.5% stake in Alpine Energy, alongside LineTrust South Canterbury (40%), Waimate District Council (7.54%) and Mackenzie District Council (4.96%).
TDHL chairperson Mark Rogers has flagged the impact of the lack of dividends, warning councillors in July it would be “significant and material”.
Clark-Reynolds said the company’s 31,000 domestic and small commercial customers would see the credit on their bill by May or June.
“I would think about it almost being more like an apology payment,” she said.
Asked how they were going to fund the credits, Clark-Reynolds said it would come from a mixture of savings already made in the business, cash flow and debt.
She said the company had a lot of assets, which it could look to sell, and a good relationship with its bank.
“… we are quite confident we can do that.
“I can absolutely say that this won’t be taken back from customers in the future from price rises.”
Asked why they decided on a flat rate credit for all customers, she said it was too complicated to work out how much individual customers had been overcharged.
“… nobody, including the regulators, wants to make us incur massive transaction costs working out exactly who should get what, and that’s why it’s important to understand that it’s not a refund, it’s a credit.”
She confirmed customers of just a few months would get the same amount as those of 10+ years.
Customers with three-phase power would get $992.83, and big industrial users would be credited relative to their power bill.
She said that amount was “commercially sensitive”, but some are “getting six figures back”.
Former customers and deceased estates could also apply for the credit and will have six months to do so.
Alpine Energy adjusted its prices from June 1, 2024, to mitigate the impact of the error.
Clark-Reynolds said the credit had meant cutting and deferring some spending, but any work critical to safety had been fully funded.
She said they were about “98% done” on an improvement plan, which they had been ordered to do by the Commission, and it commenced when the error was discovered.
“As soon as we found that we started putting in place processes to make sure it couldn’t happen again.”
She said that had included putting in place much better internal audit controls, and assessments of those.
Asked whether anyone would be held accountable internally, she said “none of us were here, it happened in 2012”.
“We made the mistake in 2012, and continued to make the mistake for nine years.”
She said the process to unwind the error was “unbelievably complex” and had taken some time to work out.
“The modelling we were doing right up to the wire, so even as close a week or two before the agreement we were still working back and forth with the Commerce Commission to try and get the exact number.
“… because we are the first people to have this problem, there was not a lot of experience in how to build all of the spreadsheets to do all of this.”
She said the experience had been a good wake-up call for the board, and others “about what level of scrutiny you give to regulation and how you look at your compliance”.
“And … I think for all chairs, to make sure that the entire board is all over the finances and, in particular, in a regulated company that you all exactly understand how it works.”