Power monopoly to refund $105k
Nelson Electricity must lower its prices next year after the Commerce Commission found it overcharged customers $91,793 in the year to March.
The business is the sole electricity distributor for central Nelson, and has 9200 customers.
Because Nelson Electricity is a monopoly under the Commerce Act, the commission sets the maximum revenues the company can earn and the minimum standards of quality it must deliver.
Under the settlement with the commission, Nelson Electricity will reduce its prices to collect $105,075 less revenue for the year beginning April 1. The penalty is based on the $91,793 overcharged adjusted for inflation.
General manager Phil Goodall said the settlement was a ‘‘pragmatic solution’’ and meant customers would save about $5 to $6 on their power bills during 2018.
He said the faulty forecast model had predicted that power consumption would be higher than it was over the year to March 2017.
Nelson Electricity reported in June that it had breached its revenue cap by 1.37 per cent.
The commission’s deputy chairwoman, Sue Begg, said the the breach was due to an ‘‘inadvertent error’’ by Nelson Electricity.
‘‘We acknowledge the constructive way in which Nelson Electricity has approached the settlement process and are pleased to have resolved the breach without having to resort to the courts.’’
The commission has reached four settlements and sent five warning letters to energy distributors about non-compliance with the ‘‘default price-quality path’’ for monopoly companies since 2011.
A similar case was brought against Vector in July after it overcharged Auckland customers $13.9 million by not assigning lowuse tariffs to some who qualified.
Vector has to reduce its revenue by $4.6m by March 2019 and by $9.2m by March 2020.
A commission spokeswoman said revenue caps had been exceeded over the years ranging from honest mistakes to some energy companies trying to be ‘‘a bit clever with their accounting’’.
At the time of Vector’s settlement, chief executive Simon Mackenzie said the commission accepted Vector did not intend to breach its regulated price when it restructured.