Transpower Issued With Compliance Advice Following Commission Investigation

The Commerce Commission has issued Transpower New Zealand Limited (Transpower) with a compliance advice letter after an investigation into its contraventions of quality standards for the 2018, 2019 and 2020 years.

The quality standards are set under the Transpower Individual Price-Quality Path Determination.

Deputy Chair Sue Begg said the Commission’s investigation did not identify any concerns with Transpower’s wider management of the network or asset management practices in general.

“The investigation showed that the contraventions in the period from 2018 to 2020 were not caused by failures to meet good electricity industry practice. An independent expert engineering report we commissioned as part of the investigation concluded that adverse weather and one-off equipment failures contributed to the contraventions.”

The report also identified that Transpower had made a number of improvements to its systems and practices over the 2015—20 regulatory period which should ultimately benefit consumers.

“Transpower’s introduction of condition-based risk management systems in particular should result in real benefits to consumers by enabling Transpower to improve the way it identifies the underlying causes of interruptions as well as mitigating their effects.”

A compliance advice letter is the lowest level enforcement response the Commission issues for this type of contravention.

“In the Commission’s view, Transpower’s departures from good industry practice were not sufficient to warrant a more severe response,” said Ms Begg.

“However, Transpower has had successive years in which it has failed to comply with its quality standards and we will be looking for improved performance in the current and future regulatory periods.”

The compliance advice letter is available through the case register on the Commission’s website.

Background

Transpower's role is to ensure electricity can be transported from where it is generated to some large electricity users and the distribution businesses that deliver it to homes and businesses all over the country. Its network is made up of nearly 12,000 km of high-voltage transmission lines (and the pylons that hold them) and more than 170 substations and switchyards.

Transpower is responsible for building, maintaining and operating this network and is required to provide a report each year assessing compliance with its price path and quality standards, including:

• how Transpower has performed against its incentives,
• whether Transpower has met its quality standards, and how it performed against its grid output measures, and
• reporting on Transpower's performance initiatives.

The Commission’s role is to set quality standards, monitor performance and determine the maximum revenue Transpower can recover from consumers to run the national grid efficiently.

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