Business owners peruse insurance policy after blackout

Auckland business owners were examining the fine print of their insurance policies today to see if they were covered for losses after yesterday's blackout.

Insurance Council chief executive Chris Ryan said some policies had a time clause that prevented coverage if a power cut was less than 24 hours.

"[The clause] says if the outage is less than 24 hours, or possibly 48 hours, then it's not something you can claim because it's not deemed serious enough to destroy your business," Mr Ryan said.

"But most businesses can claim for business interruption."

He said the time clause should not come as a surprise to businesses, but often it did.

"These clauses have been around for a long time and they're out there to make sure people can afford insurance. It keeps the premiums down."

Mr Ryan said coupled with property damage from heavy snow falls in the South Island, it was a busy and expensive day for insurance companies.

Transpower has taken the full brunt of the blame when a single earth wire at its Otahuhu substation snapped, plunging the city into darkness, affecting the CBD and about 700,000 residents for most of the working day.

The wire dropped onto Transpower's 110kv switching equipment at 8.32am yesterday and cut power to most of Auckland and Manukau cities.

The Employers & Manufacturers Association (Northern) chief executive Alasdair Thompson estimated $70 million was lost by business.

Mr Thompson said just as much blame needed to be lumped on the Government and the Electricity Commission for allowing the electricity infrastructure to become aged.

"The root cause of the scale of the electricity outage is the consequence of under-investment in new transmission lines and sub stations over many years," Mr Thompson said.

He said the massive power and gas outages yesterday exposed again the vulnerability of Auckland's power supply.

Fixing the problem, Mr Thompson said, was "extremely hard" under the Government's regulatory arrangements.

"Energy Minister David Parker doesn't seem to understand fully the obstacles to fixing Auckland's power supply."

Transpower acknowledged the Otahuhu facility was 50 years old and though it had been maintained, it was stretched to capacity and its technology was old.

"Simply put we have an old fragile system fully loaded but Transpower needs extensive regulatory approvals before investing to rectify the situation," Mr Thompson said.

He said the Electricity Commission recently rejected the new 400 KV line from South Waikato to Auckland, which included investing in new technology at Otahuhu.

"The torch of public scrutiny should be shone on the Government and its armchair critic regulator, the Electricity Commission, as much as on Transpower."

- NZPA