Alpine Energy warned over excessive network outages

14 February 2019

The Commerce Commission has issued South Canterbury electricity lines company Alpine Energy with a formal warning for breaching its regulated quality standard in 2016.

Alpine is subject to price-quality path regulation that sets limits on the total revenue it can earn as well as the level of outages or interruptions (known as quality or reliability standards) that can occur on its network each year.

Deputy Chair Sue Begg said the Commission considered the breach occurred in part because Alpine failed to invest sufficiently in maintaining or replacing overhead lines that it had identified as being old, below specification or prone to failure in adverse weather, due to competing priorities. It also considered that Alpine had not undertaken enough tree trimming and removal around its power lines, contributing to the breach.

“In this instance we considered a warning was sufficient as Alpine was taking steps during the period when the breach occurred to improve the condition of its overhead lines and increase tree trimming and removal. It also continued investing in these areas, which is reflected in Alpine complying with is quality standards in 2017 and 2018.

“A report we commissioned from independent engineering consultants noted Alpine’s network appears to generally be in a good condition. That independent review also did not indicate there were any on-going systemic problems with the network or the company’s management. Alpine is however on notice that any future breach may result in court proceedings and a financial penalty,” Ms Begg said.

“It is vital that lines companies ensure they are appropriately managing the issues they have identified on their network. Our decision was finely balanced between issuing court proceedings and issuing a warning letter, based on the particular circumstances of this case. Where we identify any company that makes choices to de-prioritise quality standard compliance in the future, we may reach a different enforcement decision.”

The warning letter and related report can be found on the Commission’s website.

Background
Alpine Energy is based in Timaru and provides lines services across several districts comprising an area covering 10,000 square kilometres. It is owned by Timaru District Holdings Limited (47.5%), LineTrust South Canterbury (40%), Waimate District Council (7.54%) and Mackenzie District Council (4.96%).

Under the Commerce Act we set price-quality regulation, including quality standards, for lines companies like Alpine. The quality standards are breached when a lines company exceeds its limit of length or number of outages in two out of three consecutive years. Alpine exceeded these limits in 2014 and 2016, meaning that it breached its quality standard in 2016.

A number of electricity lines companies have previously received warnings or signed settlement agreements for breaching the Commission’s price-quality regulation. Details of previous enforcement responses can be found on our website at https://comcom.govt.nz/regulated-industries/electricity-lines/electricity-lines-price-quality-paths/electricity-lines-default-price-quality-path/complying-with-the-default-price-quality-path.

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