Commerce Commission to keep close eye on South Canterbury lines company
Friday, 11 April 2025
South Canterbury lines company Alpine Energy should have fronted up to customers immediately and could have chosen to pay them back sooner, the Commerce Commissioner says.
Speaking to The Timaru Herald following the release of its decision to order Alpine Energy to refund customers $16.9 million, commissioner Vhari McWha explained why it took so long to reach a resolution, and why the company is now on their list of ones keep a close eye on.
On Wednesday, the Commission confirmed Alpine Energy would not be charged over the accounting error which led to it overcharging its 33,500 customers over a period of nine years.
Customers impacted by the error would be credited depending on what type of account they held, households and small businesses would get $261.60, those using three-phase power $992.83 and larger commercial and industrial customers would be credited based on their size and usage.
“From our point of view, it was really important that the local consumers were … compensated for the amount that they overpaid,” McWha said.
“That was the first focus, and then recognising that this had caused, potentially for some customers, them material hardship and so we wanted Alpine to fund some community initiatives.”
As such, the company had been ordered to spend at least $1.5 million to support access to electricity in the local South Canterbury community.
McWha gave examples of those as energy efficiency initiatives or financial help for people who may be in a vulnerable position or low income household.
Asked whether it was fair that the lump sum payments were being offered regardless of how long a customer had a connection, McWha said it was deemed too difficult to work out individual payments for all customers.
“We wanted people to be compensated and it was kind of a bit of a trade off between that complexity and the accuracy.
“Some people will get a bit of a windfall gain from that, the people that perhaps recently moved into the area.”
However, she said those who may have moved out of the area would not miss out.
“The other thing that was really important was that Alpine will need to advertise and make sure that people are able to apply for a refund, even if they had left the area.”
Speaking about the investigation, McWha said it was “quite a challenge unpicking the error”.
“Because it had gone on for several years, trying to make sure that we … from our point of view … we really wanted to make sure that customers received the full amount that they were entitled to. So it was important to us that we unpicked that accurately.”
Asked whether that was why it had taken so long, McWha said there had been a “bit of back-and-forth” between the Commission’s investigators and modellers and Alpine Energy “to work out what the effect had been”.
“I think everybody was doing the best that they could to resolve this as quickly as possible, but it was quite complicated.”
Giving an update at a Timaru District Council meeting last month, on behalf of shareholder Timaru District Holdings Ltd, general manager Frazer Munro implied the delay in getting a resolution was due to the Commission.
“The Commerce Commission has been prioritising the default price path regime for all of the EDBs, which comes in to play on the first of April, and they’ve been dealing with the Wellington … reduction in staff and … challenges.
“It’s been a long process with the Commerce Commission, we’ve got to march to their drum unfortunately,” Munro told councillors.
Asked whether she thought that was fair, McWha said “I don’t really accept that it was the Commission’s delay”.
“Could we move faster? Maybe. We obviously have a wide scope of things that we’re looking at so we have to prioritise and make trade-offs.
“Could Alpine have moved to repay customers more quickly? Also maybe, they didn’t actually have to wait for us to agree to the amount.
“But, from their point of view it probably made sense to make sure they were making one payment.”
That was not the only delay in the saga, with Alpine Energy taking more than eight months to tell customers of the error after it was discovered.
The error was reported to the Commission in August 2023, but customers were not told until mid-April 2024. About six weeks later, Alpine Energy adjusted its prices to mitigate the impact of the error.
“My view would be that the company should have owned up to its customers straight away, even if they were unable to immediately compensate them.”
This is the second time Alpine Energy has been before the Commerce Commission in recent years. In 2019, the company received a stern warning from the Commission for breaching outage limits and failing to upgrade its lines.
A letter, released by the Commission at the time, criticised the company, saying it had “failed to invest sufficiently in maintaining or replacing overhead lines assets that it had identified as being old, below specification, or prone to failure in adverse weather”.
McWha said the two cases had “raised Alpine” on its list of companies to watch.
“This is a big deal … certainly while the conduct was unintentional, it was quite long-standing, in terms of their failure to detect the error.”
She said the Commission had required Alpine to put in place an improvement plan which it would be monitoring.
“We obviously keep an eye on all of the electricity distributors, but … we prioritise some over others. We will be keeping a closer eye on Alpine.”
On Wednesday, Alpine Energy board chairperson Melissa Clark-Reynolds said customers could expect to see the credits applied to accounts in May or June, and former customers could apply for one via the company website.
Alpine Energy is owned by four shareholders: the Timaru District Council’s holdings company, Timaru District Holdings Limited (TDHL), owns 47.5%; LineTrust South Canterbury owns a 40% stake; Waimate District Council owns 7.54%; and Mackenzie District Council has the remaining 4.96%.