Vector to return $13.9 million to Auckland electricity consumers

On 7 July we announced electricity lines company Vector would return $13.9 million to Auckland electricity consumers after it breached its regulated price path by collecting more revenue than it was entitled to in the 2014 and 2015 financial years.

In April 2013, Vector restructured its prices for residential consumers into two main tariffs: low-user and standard user. The optimal tariff for an individual household depended on its annual consumption of electricity. Vector adopted an unrealistic assumption that virtually all customers would be switched by retailers to the rate best-matching their energy needs on day one. However, at the end of the first year 28% of Auckland households were still on the less advantageous tariff, meaning Vector collected more revenue than it was entitled to and customers paid more than they needed to.

The settlement avoids a costly and time-consuming court process, with the repayment taking the form of Vector holding residential prices flat for the next 2 years starting April 2018.

The case highlights the need for consumers to check their electricity tariffs, with 80,000 Auckland households estimated to be on a more expensive tariff for the lines component of their electricity bill. Energy retailers and consumers should be checking if they are eligible for a more suitable tariff, with the switch estimated to save households up to $200 a year.

More information on the settlement is available on our website.