16 Feb 2018

Court battle looming for Contact Energy over bill

1:27 pm on 16 February 2018

A high stakes court battle is looming over a $13,000 compensation bill that one of New Zealand's big four energy companies says is fundamentally unfair.


Court Photo: RNZ / Diego Opatowski

Contact Energy fears the bill stemmed from a criminal act and paying it would set a precedent that could cost millions.

But a special tribunal disagreed and said Contact was liable for the loses.

Contact then paid the money on an ex gratia basis.

But it has gone to the High Court seeking a declaratory judgement for fear of being liable for large sums of money every time an electricity wire fails.

The problem began in 2015 in Auckland when a man who was believed to be suicidal, rammed his car into power poles.

A man in the neighbourhood argued a power surge stemming from the driving incident caused $14,000 damage to valuable electronic equipment in his home.

He sought compensation from his supplier, Contact Energy, which refused to pay.

The matter was then referred to the industry arbiter, Utilities Disputes, formerly known as the Office of the Electricity and Gas Complaints Commissioner.

Its ruling said Contact Energy was the man's electricity provider and should be liable for the damage to his gear, under the Consumer Guarantees Act.

However, it lowered the price from $14,000 to $12,997.86.

A precedent

Contact Energy's chief executive Dennis Barnes has vowed to fight the ruling right down the line.

He said it could lead to huge costs being imposed on companies like his if allowed to stand.

"It's a really important precedent case," he said.

"The implication is huge for the sector in that retailers could bear responsibility for the underperformance of the (electricity) network and that could be a high cost."

Mr Barnes went on to attack the way Utilities Disputes works, suggesting the organisation was not impartial.

"They have become much more of a customers' champion in the way they consider their judgements as opposed to being an objective decision maker."

In response, Utilities Disputes rejected any suggestion of bias.

Its commissioner, Nanette Moreau, declined to discuss the facts the case but said there was a reason in principle for retailers to be held liable for other people's mistakes.

That was because the retailer was often the only person the customer had any contact with.

That meant it was fair for retailers to pay damages to a customer and then seek costs of their own from suppliers, distributors or other people who had let them down.

Ms Moreau argued it was unreasonable for the customer to become some sort of super sleuth and track down the primary offender, who might be many links in the chain away from them.

The looming court action has been joined by several other companies in the electricity industry as well as by the government which wants the matter settled.

There is no date for the hearing.


An earlier version of this story incorrectly linked the man ramming power poles to a case in Taupō where a woman died.