Authority's Final Review Maintains Transpower's Errors Led To 9 August Power Cuts

The Electricity Authority (Authority) has completed its final review of the 9 August 2021 power cuts which left 34,000 customers without electricity on one of the coldest nights of the year.

The Phase 2 review, published today, provides new observations and a summary of the various reports and investigations looking into the 9 August events already conducted by the Authority, system operator (Transpower), and the Ministerial Investigation.

The review confirms the earlier findings of its Phase One report, and the Ministerial Investigation, that Transpower’s coordination and communication failures meant consumers were disconnected unnecessarily on 9 August.

"From the outset, our priority ahead of Winter 2022 has been to ensure the system operator is better prepared in the event of an emergency, and we’re very confident that good progress has been made," Authority Chief Executive James Stevenson-Wallace said.

"As contract managers for the system operator, we’ve learnt valuable lessons from these events and as recommended in the Ministerial Investigation, we will be holding Transpower more firmly to the rules and contracts in its performance as system operator," Mr Stevenson-Wallace said.

The Authority says the system operator has made significant improvements to its communication tools and processes since 9 August, and that it will continue with a rigorous assurance process to ensure all recommendations are addressed.

"The system operator will be actioning our recommendation to lead its first industry-wide simulation exercise on May 26 - based on managing a hypothetical grid emergency where supply is forecast to fall below demand," Mr Stevenson-Wallace said.

"This is a critical preparedness exercise to put the system operator’s changes to the test and to ensure its communications and processes are effective and will minimise impacts on customers in any future events."

On 19 April 2022, the Authority also announced its decision to make a formal complaint to the Rulings Panel in regards to alleged code breaches by the system operator on 9 August.

The Rulings Panel is an independent body that deals with formal complaints of code breaches. If a complaint is upheld, the Panel can impose penalties, award costs or compensation and recommend code amendments.

An Undesirable Trading Situation investigation related to the events of 9 August is still underway and open for consultation until Wednesday, May 4, 2022.

You can read the full Phase 2 report here.

For more information:

- UTS supplementary consultation paper

- Notice of decision to lay a formal complain with the Rulings Panel 9 August 2021

- Phase One review: Immediate assurance review of the 9 August 2021 demand management event

- 9 August 2021: Background and progress to date

Notes for editors

• The Electricity Authority is an independent Crown Entity with a statutory objective to promote competition in, reliable supply by, and the efficient operation of, the electricity industry for the long-term benefit of consumers.
• The Authority is required under the Electricity Industry Act 2010 (Act) to contract Transpower for system operator services. We pay for those services via the system operator service provider agreement (SOSPA). Transpower as the electricity system operator is responsible for managing supply emergencies and providing information on security of supply.
• On Monday 9 August 2021 approximately 34,000 customers across New Zealand experienced an electricity cut without warning. The biggest impact was felt in the Waikato region with over 17,000 customers disconnected.
• The Authority used its statutory powers under Section 16(1)(g) of the Act to conduct a two phased review into exactly what happened on 9 August 2021. The first phase of the review sought immediate assurance and focused on the system operator’s demand allocation tool and communication processes and protocols. The second phase of the review focused on lessons that can be learnt from the event for the Authority, lines companies, the system operator, generators, retailers, and direct connect consumers.
• Section 16(1)(g) of the Act states the Authority’s functions as including "to undertake industry and market monitoring, and carry out and make publicly available reviews, studies, and inquiries into any matter relating to the electricity industry."

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