ComCom issues warning after Alpine Energy overcharges by $16.9m

The Commerce Commission says Alpine Energy overcharged customers by $16.9m. Photo / NZME

The Commerce Commission has issued a warning to South Canterbury-based lines company Alpine Energy after an accounting error resulted in it overcharging customers by $16.9 million.

Commissioner Vhari McWha said its focus was on ensuring Alpine returned the money to customers, with additional funds committed in recognition of the harm the error caused the wider community.

“We’re mindful that, given electricity is an essential service, consumers may have suffered unnecessary hardship as a result of this error,” she said.

“That’s why in addition to paying customers back the amount they are owed, we have secured a commitment from Alpine to spend at least $1.5m to support access to electricity in the local South Canterbury community.”

McWha said unpicking the effects of the error had been a lengthy but essential process to ensure the correct amount was returned to consumers.

“While we do not think the breaches were intentional, they are nonetheless very serious and preventable.”

The undertakings require Alpine to make improvements to its processes so it can avoid similar mistakes.

The lines company, which services more than 33,800 customers, had provided incorrect information disclosure statements to the Commission relating to its depreciation calculations.

This information was used by the Commission to set allowable revenues and Alpine’s maximum allowable revenue was overstated, leading to customers being overcharged for the lines components of their electricity bills between 2015 and 2024.

The Commission said Alpine must now:

• Refund current customers the $16.9m overcharged;
• Establish a programme to provide discretionary payments to former customers who would otherwise not receive a refund;
• Within two years, spend at least $1.5m on initiatives to support access to electricity in the local community, like community resilience, affordability and energy efficiency;
• Prepare an improvement plan, setting out actions Alpine intends to take that are designed to mitigate repeating the error.

The Commission has also issued a warning letter to the company.

Alpine adjusted its prices from June 1, 2024 to mitigate the impact of the error.

The $16.9m in refunds for the overcharge in previous years will be delivered by crediting the accounts of current Alpine customers, the Commission said.

There will also be a programme to make payments to former customers who can show they are eligible for a refund.

Alpine owns and operates the electricity distribution network that powers consumer homes and businesses in the South Canterbury region, which includes the Timaru, Mackenzie and Waimate Districts.

The company is partially owned by consumers connected to its network, and pays a dividend to its shareholders, which includes the community trust.

This in turn resulted in a distribution to consumers through bill credits to retailers.