The fallen transmission pylon at Glorit north of Auckland last June caused major disruption to Northland's electricity network. Photo / NZME
A class action has been filed against national power grid operator Transpower and its lines maintenance contractor Omexom over the outage in June last year that left much of Northland without power for days.
The class action seeks to recover losses on behalf of all Northland businesses that were impacted.
The outage was triggered when a Transpower transmission tower near Glorit collapsed during routine maintenance, cutting power to homes and businesses in most of the Northland region.
The contractor performing the maintenance had removed all of the nuts from at least two of the tower legs at the same time, which was subsequently acknowledged to be outside of standard practice.
An independent review by the Electricity Authority said the collapse was caused by “entirely avoidable” factors, including Transpower’s inadequate procedures and deficient training, which had already been the subject of a prior internal warning by a senior engineer.
About 180,000 residents and 20,000 businesses were without power – some for several days – as a result of the incident.
The case is being run by two law firms, LeeSalmonLong and Piper Alderman, with backing from litigation funder Omni Bridgeway.
David Bullock, a partner at LeeSalmonLong, said Transpower and Omexom’s contribution of $1 million to a regional resilience fund following the outage was unlikely to cover the actual losses suffered by Northland businesses.
“The collapse of the tower and the power outage that followed were not the product of some uncontrollable event like a storm – they were the result of a significant failure of infrastructure management that should have been easily foreseen and avoided,” Bullock said in a statement.
In a separate statement, Far North Mayor Moko Tepania said the incident was avoidable and had damaged the regional economy.
“The funding that we did receive following the event was hard-fought and well- received, though pales in comparison to the significant losses experienced by businesses across our rohe [region],” Tepania said.
Piper Alderman partner Hannah Brown said it can be difficult for individual business owners to challenge the power and influence of a state-owned enterprise, such as Transpower, and the financial resources of an entity like Omexom – a subsidiary of a multinational company.
“This lawsuit is about giving those businesses access to justice and an opportunity to group together to fight for compensation,” Brown said.
“We see this as being something that could easily have been avoided, so this differentiates it from other crisis events,” she told the Herald.
The lawsuit is intended to be run on an “opt-out” basis, meaning all businesses that were impacted by the incident will automatically be included once the claim is filed, but businesses will have the opportunity to opt out of the process if they wish to.
The claim is being funded by Omni Bridgeway, meaning that it does not cost businesses anything to be involved in the action – whatever the outcome in court.
Jacob Kerkin, an investment manager at Omni Bridgeway in New Zealand, said litigation funding will enable those affected to seek compensation collectively, without bearing the costs and risks of the action.
Litigation funding is when a third party provides money to plaintiffs to cover the costs of pursuing a lawsuit.
In return, the funder receives a share of any settlement or judgment if the case succeeds.
The Electricity Authority (EA), in its report on the outage, said a tower collapsing during routine maintenance should not happen.
“Although Transpower described the event as ‘unprecedented and inconceivable’, the underlying factors that contributed to the tower’s collapse were entirely avoidable,” the EA said.
The authority recommended better processes, documentation and training, along with the need for better oversight.
“At the heart of this review is security of electricity supply – its criticality to consumers and businesses and what is needed to ensure that such events do not happen again,“ the EA said.
Class actions are common in Australia and are becoming more prevalent in New Zealand.
Last month, ASB agreed to pay $135.6m to settle a class action against the bank for alleged breaches of the Credit Contracts and Consumer Finance Act.
The action related to disclosure documents that ASB was required to provide to customers who had requested changes to their lending arrangements between 2015 and 2019.
The settlement brought to an end four years of legal proceedings against ASB, although the class action is still proceeding against the ANZ.
Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.