Why Vector is not paying back what it overcharged you

Vector is refusing to pay back $13.9 million it overcharged Auckland customers.

Vector is refusing to pay back $13.9 million to Aucklanders after overcharging them.

A Commerce Commission decision earlier this month found that the power company had been overcharging customers, something it admitted to.

After a pricing change, about a third of Auckland households were charged too much for power between 2014 and 2015.

Instead of paying the money back all at once - estimated to be about $25 per home - Vector will set a cap on lines charges, reducing its revenue over two years beginning in April next year.

Mercury Energy chief marketing officer Julia Jack said that customers "shouldn't have to wait".

"It is actually the customers' money and it would help them with the current winter chill," she said.

In a statement, Vector said the breach of its regulated pricing was "unintended", and residential prices will be held for the next two years, "resulting in customers paying less".

Vector chief executive Simon Mackenzie said it was "interesting that Mercury was purporting to act as consumer advocate given that it - along with other retailers - had failed in its duty to identify consumers who should have been placed on a lower cost tariff".

"We have been totally upfront throughout, acknowledged our mistake and the Commerce Commission accepted that we did not intend to breach our regulated price path at the time we restructured prices.

"Ironically, the breach was a result of our misplaced confidence in thinking retailers like Mercury would do the right thing for low user consumers and that retail market competition would prevail.

"Vector was legally prevented from unilaterally switching consumers between low use and standard use tariffs. We were forced to rely on retailers to identify and request Vector to switch those consumers who would benefit from a low use fixed charge tariff. In many cases, the retailers simply didn't do it."

In the statement, Vector said it settled on the reduced line charge payment plan with the Commerce Commission because "it is the most reliable way to ensure the over recovery is returned to customers".

"Vector wants to ensure the money gets to consumers, particularly in light of how the breach came to pass. This way we can be sure that all consumers will get what is owed."

Customers affected by the overcharging were located in Auckland's CBD, Avondale, Mangere, Papakura and the eastern suburbs.

Mercury said it has offered to work with Vector to ensure the money is repaid.

"Mercury wants to work with Vector to have the $13.9 million released to all retailers so the amount could be applied to energy costs via a rebate," Jack told Fairfax.

"From Mercury's perspective we'll ensure that our customers get every cent passed through from the Vector refund."

Jack said the rebate would be externally audited and the report made public.

"To be doubly sure, we'll top up the amount by 5 per cent to Mercury customers if Vector hands over the cheque in the next 30 days."

Vector did not accept the offer, Fairfax reported.