Electricity lines company Vector will return $13.9 million to Auckland consumers after it collected more revenue than it was entitled to in the 2014 and 2015 financial years.
In a settlement reached today by the Commerce Commission, Vector will reimburse Auckland electricity consumers overpaying for their power when Vector restructured its price tariffs for residential households in April 2013.
Vector overcharged electricity consumers when it created two main tariffs, "low-user" and "standard user", but left it up to electricity retailers to identify and request the optimal tariff for a given household.
This would be based on a household's annual consumption of electricity.
Vector said it assumed competition in the electricity retail market would ensure virtually all residential customers would be switched to the most appropriate rate from day one.
Yet, the Commerce Commission found that by the end of first year of the new price structure, 28 per cent of Auckland households had still not been switched to the tariff that was appropriate for their circumstances and were paying more than they needed to.
Commission Deputy Chair Sue Begg said Vector should not have assumed that users would all be immediately transferred by electricity retailers to the best rate.
"While Vector could not predict consumer switching with complete accuracy, its working assumption was unreasonable and led to a large number of households overpaying for their electricity," Ms Begg said.
The case also highlights the need for consumers to check their electricity tariffs.
"An estimated 80,000 Auckland households could still be on a more expensive tariff for the lines component of their electricity bill," Ms Begg said
Energy retailers and consumers themselves should be checking that the low-user tariff option is being used where it can be, as it could save households up to $200 a year."
Vector delivers electricity to around 550,000 homes and businesses in the greater Auckland region.