IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV 2016-485-702 [2017] NZHC 1774
BETWEEN VECTOR LIMITED
First Plaintiff
AND
PAUL HUTCHISON, WILLIAM CAIRNS, JAMES CARMICHAEL, KAREN SHERRY AND MICHAEL BUCZKOSKI
Second Plaintiffs
AND
THE ELECTRICITY AUTHORITY Defendant
Hearing: 23 - 24 May 2017 Counsel:
J A Farmer QC and S M Hunter for First Plaintiff
D R Bigio QC for Second Plaintiff
A R Galbraith QC and L OʼGorman for Defendant
D Laurenson QC and J L W Wass for Commerce CommissionJudgment:
31 July 2017
JUDGMENT OF SIMON FRANCE J
Introduction
[1] The Electricity Authority (the Authority) is established by the Electricity Industry Act 2010 (the Act).1 Its role is to make and administer the Electricity Industry Participation Code 2010 (the Code), to monitor compliance with that Code
and to enforce it.
1 Electricity Industry Act 2010, s 12.
VECTOR LTD v HUTCHISON, CAIRNS, CARMICHAEL, SHERRY AND BUCZKOSKI [2017] NZHC 1774 [31 July 2017]
[2] Recently the Authority has announced proposed changes to the Code that will impact upon the contracts that are entered into between distributors and retailers. In brief, distributors own the power lines. Retailers must enter into agreements with them to use the distributor’s network in order to get the electricity to their customers. These agreements are known in the industry as Use-of-System Agreements (UoSAs).
[3] From the distributor’s viewpoint, the Authority’s proposals mean that the content of much of these agreements will be set and made mandatory by the Authority unless the retailer agrees to different provisions. The parties are at odds over the extent of this mandatory component (Vector says all of it is mandatory) but it is common ground that as a consequence of these new proposals, if implemented, significant portions of the contracts will be fixed. Indeed, that is the purpose of the exercise, as the Authority wants these agreements to be standardised.
[4] The process is at the proposal stage, albeit there has previously been considerable consultation, and the matter is well advanced. In these proceedings Vector seeks declarations aimed at stopping the current proposal before it gets any further. Vector has two primary propositions:
(a) the Authority has no power to interfere with freedom of contract in this way; or, alternatively
(b)if it does have some power to do that, the proposed content of these changes is outside the matters the Authority can prescribe. Rather, the subject matter falls within the exclusive domain of the Commerce Commission. (The Commission appears to say it disagrees with that.)
[5] Vector is supported in its argument by the trustees of Entrust. Entrust owns three quarters of Vector. It distributes its income to consumers, and is concerned the proposed changes will prevent it doing so (by limiting Vector’s ability through the UoSA to obtain information for Entrust).
Further background
[6] There has for some time been a push for the UoSAs between distributors and retailers to be standardised. Regulators have sought to achieve it by promulgation of model agreements which it was hoped…
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- Vector Limited v Electricity Authority [2017] NZHC 1774
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- [2017] NZHC 1774
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