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The Commerce Commission has issued a warning and negotiated enforceable undertakings from South Canterbury-based Alpine Energy after an accounting error resulted in it overcharging customers by $16.9 million.
In deciding on the appropriate enforcement action, Commissioner Vhari McWha says the Commission’s focus was on ensuring Alpine returned the money it had overcharged customers with additional funds committed in recognition of the harm the error caused the wider community.
“We’re mindful that, given electricity is an essential service, consumers may have suffered unnecessary hardship as a result of this error. That’s why in addition to paying customers back the amount they are owed, we have secured a commitment from Alpine to spend at least $1.5 million to support access to electricity in the local South Canterbury community.”
Ms McWha says unpicking the effects of the error had been a lengthy but essential process to ensure the correct amount is returned to consumers.
“While we do not think the breaches were intentional, they are nonetheless very serious and preventable. The undertakings therefore also require Alpine to make improvements to its processes so it can avoid making similar mistakes in the future.”
The lines company, which services more than 33,800 customers, provided incorrect information disclosure statements to the Commission relating to its depreciation calculations. This information was used by the Commission to set allowable revenues and Alpine’s maximum allowable revenue was overstated, leading to customers being overcharged for the lines components of their electricity bills between 2015 and 2024.
As part of the enforceable undertakings, Alpine must carry out the following actions:
- Refund current customers the $16.9 million overcharged;
- Establish a programme to provide discretionary payments to former customers who would otherwise not receive a refund;
- Within two years, spend at least $1.5 million on initiatives to support access to electricity in the local community, like community resilience, affordability and energy efficiency;
- Prepare an improvement plan, setting out actions Alpine intends to take that are designed to mitigate the risk of a similar error occurring in the future.
In addition to enforceable undertakings, the Commission has issued a warning letter to Alpine.
Alpine adjusted its prices from 1 June 2024 to mitigate the impact of the error. The $16.9 million in refunds for the overcharge in previous years will be delivered by crediting the accounts of current Alpine customers. There will also be a programme to make payments to former customers who can show they are eligible for a refund.
A copy of the enforceable undertakings and warning letter are available on the Commission’s website.
