Vector Limited v Electricity Authority - [2019] NZCA 49

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IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA481/2017
[2019] NZCA 49

BETWEEN	VECTOR LIMITED First Appellant PAUL HUTCHISON, WILLIAM CAIRNS, JAMES CARMICHAEL, KAREN SHERRY AND MICHAEL BUCZKOWSKI Second Appellants
AND	ELECTRICITY AUTHORITY Respondent

Hearing:	15 February 2019
Court:	Kós P, Winkelmann and Asher JJ
Counsel:	J A Farmer QC and S M Hunter for First Appellant A R Galbraith QC and L A O’Gorman for Respondent D A Laurenson QC and J L W Wass for Commerce Commission as interveners
Judgment:	13 March 2019 at 3 pm

JUDGMENT (NO 2) OF THE COURT

AThe appeal is allowed in part.

B Declarations are made that:

(a)proposed clauses 12A.4(1)(b) and 12A.10(2) of the Electricity Industry Participation Code 2010 would be unlawful;
(b)the Electricity Authority may not regulate quality standards as that term is used in pt 4 of the Commerce Act 1986; and
(c)the Electricity Authority may not mandate quality standards (as above) in any distribution agreement between electricity distribution businesses and their customers or otherwise.

CThe respondent must pay the appellants one set of costs for a complex appeal on a band B basis and usual disbursements. We certify for second and third counsel at the first hearing, and second counsel at the second hearing.

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REASONS OF THE COURT

(Given by Kós P)

This judgment is to be read in conjunction with our judgment of 30 November.[1] That judgment allowed in part Vector’s appeal, granting a declaration that two clauses which the Electricity Authority proposed to introduce in amending the Electricity Industry Participation Code 2010 would be unlawful.[2] The effect of those clauses would have been to mandate the almost complete standardisation of distribution agreements between distributors (line companies, such as Vector) and electricity retailers.[3] We held that the legislation did not permit the Authority to prohibit the negotiation of terms essentially collateral to standard terms mandated by the Code.
[1]Vector Limited v Electricity Authority [2018] NZCA 543 [prior judgment].
[2]Vector was supported by its principal shareholders, the trustees of Entrust, who are the second appellants. We refer to them together in this judgment as “Vector”.
[3]These agreements are known as “use of system agreements”, or “UoSAs”.
That disposed of the first issue in the appeal. Our prior judgment reserved for further evidence and argument a second issue:[4]
Does s 32(2) of the Act prohibit the Authority from amending the Code to require distributors to offer a default UoSA (because such amendments prescribe quality standards for distributors, a matter reserved to the Commerce Commission)? In particular:
(i)is the Authority prohibited from prescribing quality standards for distributors, because that is a matter for the Commerce Commission; and
(ii)in setting a comprehensive set of standardised contractual terms for distributors, is the Authority prescribing quality standards?
[4]In this judgment “the Act” refers to the Electricity Industry Act 2010.
We now have that further evidence, and those further submissions. Ultimately there was substantial consensus…

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.

Continue reading Vector Limited v Electricity Authority

Details

AGLC: Vector Limited v Electricity Authority [2019] NZCA 49
Case: [2019] NZCA 49
Decision Date: 13 March 2019 at 3 pm

CaseChat Overview and Summary

In the case of Vector Limited v Electricity Authority, the Court of Appeal addressed the legal issues surrounding the authority of the Electricity Authority to regulate and mandate quality standards in distribution agreements between electricity distributors and retailers. Vector, an electricity distribution company, challenged the Authority's proposed amendments to the Electricity Industry Participation Code 2010, arguing that such amendments would unlawfully mandate quality standards. The Court's reasoning was grounded in the statutory framework and the roles assigned to the Authority and the Commerce Commission under the Commerce Act 1986 and the Electricity Industry Act 2010. The Court concluded that the Authority could not regulate or mandate quality standards as defined in part 4 of the Commerce Act, which pertains to price-quality regulation. The Court also held that the Authority could not prescribe quality standards in distribution agreements between distributors and their customers. The Court's final orders included declarations that the proposed code amendments would be unlawful and that the Authority was prohibited from regulating or mandating quality standards in the specified manner. The Electricity Authority was ordered to pay the appellant's costs on a band B basis.

Orders