Major Electricity Users' Group Inc v Electricity Commission - [2008] NZCA 536

IN THE COURT OF APPEAL OF NEW ZEALAND
CA205/2008
[2008] NZCA 536
BETWEENMAJOR ELECTRICITY USERS' GROUP INC

Appellant

ANDELECTRICITY COMMISSION

First Respondent
ANDTRANSPOWER NEW ZEALAND LIMITED

Second Respondent

Hearing:15 October 2008

Court:Glazebrook, Chambers and Baragwanath JJ
Counsel:J E Hodder SC and T D Smith for Appellant

D J Goddard QC and S M W Kilty for First Respondent
I R Millard QC and C J L Browne for Second Respondent

Judgment:5 December 2008 at 4.00 pm

JUDGMENT OF THE COURT

A The appeal is dismissed.
BThe appellant is to pay each of the respondents costs for a complex appeal on a Band B basis plus usual disbursements. We certify for second counsel.
____________________________________________________________________

REASONS OF THE COURT
(Given by Glazebrook J)
Table of Contents
Para No

Introduction [1]
Overview of legislative framework [5]

Electricity Act 1992  [6]
Government Policy Statement (GPS)  [9]
Electricity Governance Rules 2003  [15]
Schedule F3 – Grid Reliability Standards (GRS)  [29]
Schedule F4 – Grid Investment Test (GIT)  [32]
Background  [38]
Standard of review  [54]
Interpretation of clause 4.1 of the GIT  [58]

Issue  [58]
MEUG’s submissions  [59]
Change in MEUG’s position  [61]
The position of the respondents  [63]
The Commission’s decision  [65]
Evaluation  [66]
Failure to consider “alternative projects”  [83]
Erroneous HILP assumption  [89]

Background  [90]
MEUG’s submissions  [97]
Evaluation  [98]
Relief  [102]
Result  [105]
Appendix One: Glossary of Abbreviations
Appendix Two: The Electricity Governance Rules  [107]
Appendix Three: Decision-making Flow Chart
Appendix Four: Investment Examples  [119]

Introduction
[1]       The Major Electricity Users’ Group (MEUG) is the representative body of New Zealand’s major electricity users. The Electricity Commission is the statutory entity charged with ensuring the efficiency and reliability of the national electricity grid. Transpower is the sole operator of the grid and a state-owned enterprise.
[2]       MEUG sought judicial review of a decision made on 30 August 2007 by the Commission under the Electricity Governance Rules 2003 (the EG Rules) to approve a proposal by Transpower to upgrade the Otahuhu substation. MEUG’s application was dismissed by Wild J in Major Electricity Users’ Group Inc v Electricity Commission HC WN CIV 2007-485-2508 14 March 2008.
[3]       There are four issues in the appeal:
(a)Whether the Commission erroneously interpreted clause 4.1 of the Grid Investment Test (GIT).
(b)Whether the Commission failed to evaluate or require Transpower to evaluate appropriate alternative projects.
(c)Whether, in approving the proposal, the Commission adopted an erroneous figure for the HILP (high impact low probability) related reliability benefits.
(d)The relief that should be granted in the event that the Court is satisfied that a reviewable error occurred.

[4] Before turning to those issues, we set out the legislative context and more detail on the background. We also make some comments on the approach to judicial review in cases of this nature. For the convenience of readers, a glossary of abbreviations used is set out in Appendix One.
Overview of legislative framework
[5] Below is a summary of the legislative framework within which the Commission operates. For ease of reference, the most relevant…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2008] NZCA 536
Decision Date: 5 December 2008

CaseChat Overview and Summary

The Court of Appeal of New Zealand considered an appeal by the Major Electricity Users’ Group (MEUG) against the Electricity Commission’s approval of a proposal by Transpower to upgrade the Otahuhu substation. The appeal raised four issues: the interpretation of clause 4.1 of the Grid Investment Test (GIT), the evaluation of alternative projects, the assumption of High Impact, Low Probability (HILP) event probabilities, and the appropriate relief. The appeal was dismissed, with the Court affirming the Commission’s decisions on all grounds. Regarding the interpretation of clause 4.1 of the GIT, the Court found that the Commission’s interpretation, which allowed for investments addressing N-1 issues over the long term, was correct. The Court rejected MEUG’s argument that only minimal works necessary to meet the N-1 criterion could be assessed under clause 4.1. The Court also found that the Commission did not unreasonably fail to consider an alternative project that excluded certain expenditures, as the alternative was not proposed by any party and the Commission’s decision was supported by expert opinions. In relation to the HILP assumption, the Court upheld the Commission’s cautious approach, considering it reasonable given the high impact of any HILP event at the Otahuhu substation. The Court concluded that the Commission’s decisions were not reviewable errors and dismissed the appeal with costs awarded to the respondents.

Orders