Businesses in Northland are seeking compensation from Transpower following a power outage that affected most of the region recently.
According to RNZ’s report, Transpower CEO Alison Andrew said the outage was caused by contractors performing routine maintenance work, which resulted in a power pylon falling and cutting power to the region.
While the Consumer Guarantees Act allows for compensation claims from individuals, it does not cover businesses.
Tim Robinson, president of the local business association NorthChamber, estimated that businesses in the area lost between $40 million and $60 million due to the outage, a figure supported by economic analysis from Infometrics.
Infometrics CEO Brad Olsen explained that this estimate was derived from adjusted economic data from the 1998 Auckland blackout, factoring in inflation and regional economic differences.
In a discussion with Morning Report, Robinson outlined the challenges businesses face when filing insurance claims.
He noted that small claims might not be worthwhile due to potential increases in future insurance premiums.
“When I sort of look at it for small businesses, if you’re talking anywhere between $1,000 and say $5,000 of direct loss, by the time you’ve submitted a claim, and as I say, you’ve used your excess and then you’re facing a probable policy cost increase in the next two to three years,” he said, as reported by RNZ. “It’s a zero-sum game. It’s actually not worth lodging the claim.”
He also questioned whether insurance companies would pursue litigation against Transpower, given the complexity of the situation and Transpower’s stance that the issue falls under the Consumer Guarantees Act, which does not cover business losses.
“I’m guessing that their contractor probably has public liability insurance, which generally speaking is about $10 million. I mean our challenge as a business is saying, well, okay, Transpower you’re actually now responsible for that dealt over and above whatever that cover is that the contractor holds,” he said.
If Transpower does not agree to a compensation plan, businesses might consider a class action lawsuit, Robinson added.
According to RNZ, Andrew confirmed that they would follow proper procedures for compensating those affected by the outage, emphasising that the investigation is still in its early stages.
