Northland businesses are now considering class action against Transpower for last month’s power cut, after the electricity grid provider stated it would not give any compensation.
The power cut on June 20 affected 100,000 Te Tai Tokerau homes and businesses, with some of the largest businesses having to shut down for days. It was caused when a contractor doing routine maintenance on a high-voltage power pylon removed too many nuts at once, causing the tower to topple over.
The blackout was estimated to cost businesses $60 million, and damaged Northland’s reputation despite its strategic importance to New Zealand, said NorthChamber chief executive Darryn Fisher.
NorthChamber had been pushing Transpower to pay some compensation to individual businesses, as well as a contribution to help repair the region’s reputation.
But the talks took a turn for the worse during a meeting on Monday, when Transpower’s head of legal said the provider had no obligation to give any direct compensation or support, Fisher said.
The legal team focused on legislation which says Transpower does not have to guarantee power supply.
“They were very defensive saying ‘this is the legislative framework that we work to’. They were very cold and very stand-offish.”
Fisher said businesses do understand power can be disrupted by things outside the provider’s control, such Cyclone Gabrielle, but this incident was caused by “flat negligence” and there should be some support.
“It’s the insurance of the contractor [Omexom] that should be coming to the party and Transpower should be facilitating that instead of playing this brick wall game,” he said.
Northland’s strategic importance to the rest of the country seems to be underestimated, Fisher said.
He gave the example of the 34,00sq m Ikea store, which is being prefabricated in Culham Engineering’s Whangārei site before being transported to Auckland’s Sylvia Park, due to the skills and expertise at Culham.
Other examples include Northland providing 80% of New Zealand’s jet fuel through Channel Infrastructure’s Auckland pipeline, Northport being the northernmost deep water port and McKay providing electrical repairs for the Navy, he said.
Northland also has historic and cultural importance, with Waitangi being the birthplace of the nation, Fisher said.
“We keep getting treated like a Third World nation and it’s ridiculous.”
Fisher said residents can make claims for power cut losses through the Consumer Guarantees Act, while businesses need to go through their insurance. Disputes can also be taken to the Electricity Disputes Tribunal.
But going through insurance could take a lot of time, would cost businesses their excess and any no-claims bonus, and could require legal advice, he said.
It could be particularly hard for the large business - such as Golden Bay Cement, Silver Fern Farms and JVL - which had to close for days at a cost of hundreds of thousands of dollars, Fisher said.
Businesses are now considering class action against Transpower, but that too could be lengthy and cost a lot of legal fees, he said.
A large hurdle is the fact the legislation said there is no guarantee of power, Fisher said. Legal expertise is being sought.
He hoped a review ordered by Energy Minister Simeon Brown would recommend recourse for businesses in the case of disruptions caused by negligence.
The inquiry is being led by the Electricity Authority, with lawyer Sarah Sinclair appointed as independent chair.
It will report by September 13 on 16 points, including provisions in the Electricity Industry Participation Code and the grid reliability standards into Northland.
Denise Piper is a news reporter for the Northern Advocate, focusing on health and business. She has more than 20 years in journalism and is passionate about covering stories that make a difference.