The Electricity Authority (EA) said the August 9 power outage, which saw 34,000 customers lose power during one of the coldest nights of the year, has highlighted shortcomings in grid operator Transpower's tools and processes.
The government agency charged with overseeing the sector said in its first report on the incident that the key areas of concern were "ambiguous and at times unsatisfactory communication processes" at Transpower and a "miscalculation of demand response".
The grid emergency on August 9 was "a very rare and serious event", it said.
"The authority's phase one review sought immediate assurance that any systemic and process issues associated with the system operator's demand allocation decision support tool and communications surrounding the event have been corrected," EA each chief executive James Stevenson-Wallace said in the report.
"The actions taken by the system operator since August 9 provide assurance the system operator has learned from the operational shortcomings exposed during the event, which saw 34,000 customers lose power on one of the coldest nights of the year."
The authority said this was demonstrated on August 17 when Transpower responded with clear communication through multiple channels when another grid emergency occurred.
"We now expect the system operator to respond to the recommendations in this report to improve communications and processes for demand management events."
Transpower, as the system operator, took immediate action under difficult circumstances to avert a potentially more widespread and longer duration event, Stevenson-Wallace said.
"However, the tool used for demand allocation and communication processes were unsatisfactory and contributed to the event where over 34,000 customers lost power," he said.
"Household consumers and businesses were left without power on one of the coldest nights this year. That's not good enough."
The review identified several communication and process issues and found the system operator's tools and communication protocols had not been adequately tested for a national grid emergency.
The system operator's notices at the time did not give enough information for distributors to understand the wider context of the event.
The lack of clarity resulted in distributors and retailers not having enough information to ensure they communicated the extent of the issue with their customers.
There was confusion among distributors as to whether notices issued by the system operator were calls to immediate action or forewarning of possible future action.
This ambiguity resulted in some distributors being unsure about the action required.
The authority recommended Transpower further electricity sector readiness to respond to critical demand management incidents.
This would include an annual pan-industry exercise to test processes, actions and communications and clarify responsibilities ahead of responding to a real emergency.
The event highlighted serious issues with the system operator's load shed and restore decision support tool which is used to generate the demand allocation.
The system operator quickly suspended the use of the tool when it became apparent it was producing incorrect results.
The will now progress phase two of the review, the scope of which is broader than the system operator's response to the event and will look at all aspects of the industry response.
By law, the authority is required to contract Transpower for system operator services.
The Minister of Energy and Resources Megan Woods has directed MBIE to investigate the electricity supply interruptions.
Transpower is also conducting a review of the August 9 event and will report to the authority.