Introduction and background to the Five Year Independent ...€¦ · Web viewQueen Margaret...

Independent 5-year review of Utilities Disputes Limited

Recommendations from the review and other proposed changes

Consultation Paper for Round Two

1

Prevent. Educate. Resolve.

2

Contents

1. Introduction and background to the Five Year Independent Review.......................................2

2. The review – overall conclusions..........................................................................................3

3. First round of consultation...................................................................................................3

4. The Board’s approach for round two....................................................................................3

5. Documents and information about Utilities Disputes and schemes it operates........................4

6. Process and proposed timetable..........................................................................................4

7. Closing date for submissions................................................................................................5

8. Making submissions............................................................................................................5

9. Review recommendations requiring changes to the Scheme documents.................................5

(a) Accountability (review part 7.4)..............................................................................................6

(b) Natural Justice (review part 7.7).............................................................................................7

(c) Performance Standards (review part 13)..................................................................................7

(e) Land Complaint exclusions (review part 16).............................................................................9

10. Other Proposed changes................................................................................................10

10 (a) Mechanism to ensure Utilities Disputes can refer, and, where appropriate, consider complaints about providers without delay..................................................................................10

11. Next steps....................................................................................................................12

12. Appendix 1 – Questions for submitters...........................................................................13

13. Appendix 2 – Land complaints exclusions paper..............................................................16

1. Introduction and background to the Five Year Independent Review

The Utilities Disputes Board (the Board) is seeking submissions on its proposals to amend the Energy Complaints Scheme documents to implement recommendations from the Five Year Independent Review (the review).

3

Queen Margaret University Consumer Dispute Resolution Centre conducted the review of the Energy Complaints Scheme in 2017. This review was conducted in accordance with the Electricity Industry Act 2010, Schedule 4, Clause 15, which states:

“The provider of the approved scheme must ensure that, at least once every 5 years, an independent review of the scheme is carried out and the report of the review is provided to the Minister within 3 months of its completion.”

The review states:

“This report outlines the findings of the Five Year Independent Review of the approved Energy Complaints Scheme provided by Utilities Disputes but also includes a wider review of Utilities Disputes Limited. At the time of the review, as the only scheme provided by Utilities Disputes relates to energy complaints, for ease of reading and reporting reference is made to Utilities Disputes only.”

The review was completed in July 2017 and provided to the Minister of Commerce and Consumer Affairs, as required. The previous Minister was unable to consider the review before the general election and change of government. The review was discussed with the new Minister, the Hon Kris Faafoi in January 2018.

2. The review – overall conclusions

The review’s overall conclusion was that “Utilities Disputes is an effective dispute resolution scheme. To maintain its effectiveness into the future, the review has highlighted a number of areas for further development.”

The review also noted “with only a few minor exceptions, Utilities Disputes meets the requirements of the Key Practices for Industry-based Customer Dispute Resolution.”

The review noted there was room for improvement and detailed the areas it believes this needs to occur.

A full copy of the review and its recommendations is available here.

3. First round of consultation

The first round of consultation closed on 6 April 2018. The Board has considered submissions from 25 stakeholders and, having taken account of those views, has decided to undertake round two consultation on a set of more specific proposals. The Board has produced this consultation pack for round two of consultation.

A full copy of submissions from round one of consultation are available here.

4. The Board’s approach for round two

For round two the Board seeks views on its proposed approach to the review’s recommendations, and the information contained in this paper. The Board’s proposed approach takes into account the submissions received in round one.

4

http://media.utilitiesdisputes.org.nz/media/Consultation%20pages/2018/Consultation%20submissions%20round%20one%202018.pdf

The Board seeks feedback from members of all schemes as well as stakeholders and the wider community on the specific proposals set out in this consultation paper and the associated information pack. This is also an opportunity for members of all schemes as well as stakeholders and the wider community to provide Utilities Disputes with further relevant factual information on the proposed changes, and to correct us if we have misunderstood anything.

In relation to the proposed changes to land complaint exclusions an information paper has been prepared to assist with the consultation process and help engagement. The information paper summarises some of the issues and information relating to land exclusions, and this can be found at Appendix 2.

The Board will consider submissions received in round two before making final decisions and deciding next steps, including what, if anything, to propose to the Minister by way of changes.

5. Documents and information about Utilities Disputes and schemes it operates

For further information about Utilities Disputes, see the Utilities Disputes website here.

To access the relevant scheme documents for the Energy Complaints Scheme, available on the Utilities Disputes website see here.

6. Process and proposed timetable

Table 1 below outlines the process and proposed timetable for consultation. The Board proposes two rounds of consultation.

The questions are listed in each section. Appendix 1 contains a full list of questions and is the preferred form for submissions.

Table 1 – Indicative timetable for proposed changes

Date (week beginning)

Activity

28 May Second consultation round opens

4 June Second consultation round continues

11 June Second consultation round closes (Friday 15 June)

18 June – 6 July Board to consider submissions from second consultation round

9 July Board votes on proposed changes and gives notice to Minister of Commerce and Consumer Affairs and Energy Complaints Scheme Providers

5

http://www.utilitiesdisputes.co.nz/UD/Resources/Scheme_document/UD/Resources/Scheme_document.aspx?hkey=446d6fd6-696d-4ba0-ae89-238d4f3c59f7

http://www.utilitiesdisputes.co.nz/

20 August Any changes adopted by the Board and approved by the Minister become effective

7. Closing date for submissions

The closing time and date for submissions for the second consultation round is 5 pm on Friday 15 June 2018. Please note late submissions are unlikely to be considered.

8. Making submissions

Please send submissions in Microsoft Word format to:

Email [email protected].

Post PO Box 5875, Wellington 6140

When submitting, please use the preferred form for submissions in Appendix 1. Submitters should indicate any documents attached in support of their submission in a covering message.

The Board may make submissions available on the Utilities Disputes website. If submitters provide any information on a confidential basis, please clearly show this in a covering message.

If you have any questions during the consultation process, please contact James Blake-Palmer either by email [email protected] or phone 04 914 4537.

All submissions will be acknowledged. If you do not receive an acknowledgement within two working days, please contact James.

9. Review recommendations requiring changes to the Scheme documents

The review recommended scheme document changes to ensure Utilities Disputes and its schemes continue to meet the principles of accessibility, independence, fairness, accountability, efficiency and effectiveness.

As noted above, the review made recommendations about other aspects of Utilities Disputes requiring rule changes. Given this, the Board is consulting with members of all schemes as well as stakeholders and the wider community.

This section sets out those recommendations, provides a summary of stakeholder feedback from round one of consultation, gives the Board’s round two proposals for further consultation and poses questions to help the Board’s consideration.

Following the layout of the review, the recommendations below are set out under the relevant principle or area of the scheme document.

6

(a) Accountability (review part 7.4)

Review recommendation and Board’s initial view:

The review recommended the Board consider following the example of the Electricity Authority and name the relevant providers in its case notes. The Board disagreed with this recommendation and considered it more appropriate to name providers in breach of scheme rules and guidelines. Round one of consultation asked submitters to comment on the proposals of the review and Board.

Submissions from round one of consultation:

Predominantly community type organisations supported naming providers in case notes, citing increased transparency and incentives on providers to improve. The majority of submitters were against naming providers in case notes, noting: this wouldn’t add to the purpose of a case note; is problematic regarding privacy and where the company isn't the subject matter of complaint rather just handling it; confidential settlements, and fairness for providers with fewer complaints.

The Electricity Authority noted the review’s reference to its own process was based on a misunderstanding.

More submitters were supportive of naming providers who breached scheme rules, but many providers did not believe providers that breach guidelines should be named. Many submitters believe a provider could operate outside of guidelines but still meet their obligations under the scheme rules. Many submitters considered the existing process for non-compliance (escalation to a higher level in the provider’s organisation and, ultimately, reporting non-compliance to the Minister) to be adequate, and some suggested if there was a problem with this process it needs to be addressed as a first step.

Board’s current view

After considering the submissions to round one of consultation the Board considers providers should not be named in case notes. The Board considers providers who breach scheme rules should be named and it can already name providers that breach the scheme rules. The Board intends to retain this. The Board considers providers who breach any scheme guidelines should only be named if in doing so the provider has breached scheme rules.

(b) Natural Justice (review part 7.7)

Currently natural justice is included in the principles section of the Energy Complaints Scheme document. Natural Justice was included in the 2016 changes at the request of a provider.

7

Question for submitters:

1. Do you have any further comment on the Board’s approach to naming providers?


The review suggested the Board consider removing the principle of ‘natural justice’ from its scheme document. The Board agreed with this recommendation, noting the principle of fairness covers ‘natural justice’, so its inclusion is unnecessary. The consultation paper asked submitters whether they supported removing ‘natural justice’ from the principles.


Submitters were overwhelmingly in favour of retaining ‘natural justice’ in the scheme rules. Many submitters believed if natural justice was removed it was a signal that Utilities Disputes was lessening its accordance with the principle. Many submitters believe ‘natural justice’ is different to ‘fairness’ and includes more of a procedural element not necessarily captured in ‘fairness’, which may focus more on fairness of outcome.

Board’s current view:

The Board wishes to assure stakeholders that it always intended Utilities Disputes to act in accordance with the principle of natural justice. The Board is now intending to retain the explicit reference to natural justice in the scheme rules due to the overwhelming support received for doing so in submissions.

(c) Performance Standards (review part 13)


The review suggested the performance standards relating to the self-reporting of compliance and cost per case should be removed. The Board supported these measures being removed. Submitters we asked whether these measures should be removed and what other measures the Board could consider adopting.


There was some confusion with some submitters believing the reviewer intended for the Board to remove the self-reporting requirements altogether. To be clear, this is not the case; the reviewer means to remove self-reporting on compliance requirements as a measure of Utilities Disputes' performance.

Submitters were overwhelming in support of removing the performance standard relating to cost per case. Many submitters noted the current performance standards should not be removed until other standards have been developed. Some submitters suggested provider and complainant satisfaction could be surveyed regularly and included in a performance measure.

8


2. Do you have any further comment to the Board retaining the reference to natural justice in the scheme rules?


The Board believes the performance standards relating to cost per case and self-reporting of compliance should be removed from the scheme rules. The Board wants to assure stakeholders these will not be removed until new performance measures have been developed.

The Board also notes it will still continue with self-reporting of compliance, and Utilities Disputes is completing regular satisfaction surveys of providers and complainants.

(d) Levies (review part 14)


The review made a number of recommendation about levies: Every organisation which is covered by the Scheme should make a contribution to its

running costs. There should be no cross-subsidisation of providers, nor sweetheart deals. Thus, the

levy arrangements for Transpower and First Gas should be revisited. The fixed element should cover all costs incurred by Utilities Disputes excluding

those solely related to the handling of individual complaints. In keeping with the ‘user pays’ principle, any case reaching Utilities Disputes at

deadlock should incur a fee. The current variable fee structure needs to be reconsidered.

The Board refrained from providing a view on the review’s recommendations during round one of consultation, rather seeking views of submitters through consultation questions to assist in forming its view.


Submissions to round one of consultation showed general satisfaction with the current levy system. Most submitters were open to considering options for levy changes and many submitters suggested minor changes to the levy system. Submitters asked for due consideration to be given to the levy design process and asked for further consultation on levy proposals.

Board’s course of action

9


3. Do you have any further comment to the Board removing the performance measures relating to cost per case and self-reporting of compliance?

The Board has seen enough evidence from submissions to give further consideration to options for reviewing the levy system. The Board has decided not to consult further on the levy options at this stage and will be modelling and testing different options suggested in the review and submissions in round one before seeking further input.

More information, including a proposed timetable for further input will be made available closer to the time.

(e) Land Complaint exclusions (review part 16)

In round one of consultation the Board sought views from submitters on the independent review’s recommendation the exclusions be removed. The Board was particularly interested in hearing submitter’s views on the impact of removing the exclusions, with a request for details and examples where possible.

Submissions received were mixed, with some strong views against removing the exclusions, and some wanting more information before being able to form a view. Some submissions highlighted misunderstandings about how the exclusions operate in practice, for example, how the impact on the provider of any outcome affects the claim limit of $50,000.

Some submitters voiced concerns about the adequacy of proposed safeguards , such as the opportunity providers get to resolve the complaint, the claim limit, the discretion to decline to consider a complaint (if frivolous or vexatious) the test case mechanism and the requirement that Commissioner determinations are based on what is fair and reasonable for both parties.

The Board encourages submissions in round two to include detailed thoughts on these and other safeguards, and their impact on the viability of the exclusions — including any further factual information that may be relevant to the Board's consideration of this issue.

. The attached information paper (Appendix 2) has been prepared to assist with the consultation process and help engagement on this issue in particular by setting out more background information on exclusions.

Following round two, the Board will make a decision on whether or not to ask the Minister to remove any or all of the exclusions. The Board will decide based on the information available to it, which will include the review (accessible using the link on page 2 above) and submissions received in both round one and two of the consultation process.

The Board encourages submitters to take this opportunity to provide relevant and detailed views incorporating impact and examples and the safeguards. If submitters consider there are any factual errors in the information paper, or there is more up to date information available, this would also be welcome.

10.Other Proposed changes

Round one of consultation proposed other changes.

The basis for the Board to propose changes for the Energy Complaints Scheme is set out in the General Rules. General Rule 47 states:

10

“As well as resolving complaints, UDL may carry out activities it may consider appropriate to support its services and with the aim of promoting good practice in relation to handling of Complaints and public confidence in dealing with Providers”

General Rule 48 states:

“these activities may include…reviewing the General Rules, Scheme Rules and Schemes from time to time, to assess whether UDL considers any amendments are appropriate”.

10 (a) Mechanism to ensure Utilities Disputes can refer, and, where appropriate, consider complaints about providers without delay

In round one of consultation the Board sought views in principle on a mechanism to allow Utilities Disputes to refer and consider complaints about providers before they join.

Under the current rules, a ‘Complaint’ can only be made in relation to a ‘Provider’ (which is an organisation providing utilities services that has signed a Provider Agreement). This means that complaints can only be made in relation to members of the Scheme.For those providers we know about this is not generally a problem, as we approach them and work through the joining process with them usually before we receive complaints. However some participants, for example those operating embedded or customer networks or retailing LPG in cylinders, may not be aware of the membership requirements until we approach them to discuss or refer a complaint.

The drivers for the proposed mechanism (see wording below) are to ensure consumers have meaningful access to dispute resolution, providers are aware of their obligations and Utilities Disputes is able to reduce costs in identifying and following up with providers that have not joined. If consumers have to wait while Utilities Disputes works with new energy providers to sign them up, this can potentially impact on the principles of efficiency, accessibility and effectiveness.


There was broad support amongst submitters for such a mechanism. Most submitters considered the mechanism should apply to all schemes Utilities Disputes operates that have mandatory membership.

Some submitters considered a ‘deeming’ mechanism was contrary to the legislative requirements because the legislation requires providers to join and includes enforcement through a potential penalty of $100,000.


The Board proposes a mechanism that it believes fits with the legislative framework, helps ensure providers contribute fairly and avoids delays where possible.

The Board proposes to take the same approach it does with new providers generally by pro-rating their fixed levy depending on when they join and allowing a reasonable period of time for providers to undertake other required activities such as promoting the scheme on their website and consumer information.

11

The Board’s proposed approach takes into account the operating principles set out in the Utilities Disputes Constitution (Clause 2.7) by ensuring each provider “pays a fair, reasonable and proportionate share of the direct costs of the Scheme(s) to which the Provider belongs and of the Company’s (Utilities Disputes) overall costs.”

The Board proposes after clause 13 of the General Rules, a new clause could be inserted that says:

‘For the purposes of considering and determining a Complaint, “Provider” will include a business or undertaking in relation to which a Complaint has been received, which is obliged to become a Provider but which has not yet signed a Provider Agreement, and these rules will be interpreted accordingly’

10 (b) Changing references in scheme documents – from “lines company” to “distributor”

In round one of consultation the Board asked submitters whether they agreed with substituting “distributor” for “lines company” where they appear in the scheme documents. The Board thought this would improve consistency in terminology.


Submissions were divided on this proposed change, some submitters noted benefits in consistency with legislation and the separation of transmission and distribution. Some submitters noted both terms were already used interchangeably within the industry and the references in the scheme rules are not causing any problems and changing this is not worth the effort or cost involved.

The Board’s current viewThe submissions to round one of consultation suggests this is not causing a problem as it is currently drafted. The Board intends to consider this along with other possible tidy ups as part of its review of levies.

11.Next steps

The steps in the consultation process are set out in the timeline in table 1 above and on the current consultation page of the Utilities Disputes website.

The Board may convene the Advisory Committee of consumer and industry representatives to review submissions received and make recommendations to the Board.

12


5. Do you agree with the Board’s approach and wording to implementing a mechanism to ensure Utilities Disputes can refer, and, where appropriate, consider complaints about providers without delay?

The Board will consider submissions received in round two before making final decisions and deciding next steps, including what, if anything, to propose to the Minister by way of changes.

Once the Board approves the final versions of the amended documents, the Board will notify the Minister of the proposed changes in accordance with the Electricity Industry Act 2010, Schedule 4, Clause 8. Utilities Disputes will make the approved documents available on its website.

Hon Heather RoyIndependent ChairUtilities Disputes Ltd28 May 2018

13

http://www.legislation.govt.nz/act/public/2010/0116/latest/whole.html

12. Appendix 1 – Questions for submitters1

Principle/Area of document

# Question Submitter’s response

Accountability 1 Do you have any further comment on the Board’s approach to naming providers?

Natural Justice

2 Do you have any further comment to the Board retaining the reference to natural justice in the scheme rules?

Performance Standards

3 Do you have any further comment to the Board removing the performance measures relating to cost per case and self-reporting of compliance?

Land Complaint Exclusions

4 Please add further thoughts on the Land Complaint Exclusions here. Please provide references to specific changes where appropriate and ensure you

1 Submissions are welcome across the range of matters addressed by this consultation paper and the associated background paper and are not limited to these questions specifically.

14

provide any further factual information that may be of relevance to the Board's consideration of these changes.

Exclusion 1.1

Exclusion 1.2

Exclusion 1.3

Exclusion 1.4

Exclusion 1.5

Exclusion 1.6

Exclusion 1.7

Exclusion 1.8

Exclusion 1.9

Exclusion 1.10

Exclusion 1.11

Exclusion 2.1

Exclusion 2.1

Mechanism to 5 5. Do you agree with the Board’s

15

ensure Utilities Disputes can refer, and, where appropriate, consider complaints about providers without delay

approach and wording to implementing a mechanism to ensure Utilities Disputes can refer, and, where appropriate, consider complaints about providers without delay?

16

13.Appendix 2 – Land Complaints Exclusions – Information Paper

CONTENTS

Introduction.................................................................................................................................................

Purpose of this paper.............................................................................................................................

Independent review (the review)....................................................................................................

Background to the exclusions...........................................................................................................

Background to the Land Code...........................................................................................................

THE EXCLUSIONS......................................................................................................................................

1.1 (Previously B.9.8(a))......................................................................................................................

1.2 (Previously B.9.8(b))......................................................................................................................

1.3 (Previously B.9.8(c)).......................................................................................................................

1.4 (Previously B.9.8(d))......................................................................................................................

1.5 (Previously B.9.8(e))......................................................................................................................

1.6 (Previously B.9.8(f)).......................................................................................................................

1.7 (Previously B.9.8(g))......................................................................................................................

1.8 (Previously B.9.8(h))......................................................................................................................

1.9 (Previously B.9.8(i))........................................................................................................................

1.10 (Previously B.9.8(j)).....................................................................................................................

1.11 (Previously B.9.10).......................................................................................................................

2.1 and 2.2 (Previously B.9.9 (a) and B.9.9 (b)).....................................................................

Other views in support of the exclusions generally.............................................................

Definitions:...................................................................................................................................................

IntroductionThe Board has directed Utilities Disputes Ltd to carry out a second round of consultation on proposed changes to the Scheme rules. 2 This paper focusses on the Land Complaint exclusions aspect of that consultation.

An independent review of the Scheme in 20173 recommended Land Complaint exclusions be removed from the Scheme Rules. The independent review report can be accessed here. As part of the second round of consultation, Utilities Disputes wants to obtain the views of members of all schemes as well as stakeholders and the wider community on a set of specific proposals around Land Complaint exclusions.

2 References to the Scheme in this paper refer to the Electricity and Gas Complaints Commissioner Scheme established in 2001, which since 1 November 2016 has operated as the approved Energy Complaints Scheme provided by Utilities Disputes Ltd and references to the Scheme Rules refer to The General and Scheme rules for the Energy Complaint Scheme operated by Utilities Disputes Ltd. 3 Dr Gavin McBurnie and Dr Chris Gill Independent Review of Utilities Disputes Ltd (12 July 2017 — Queen Margaret University).

17

Purpose of this paperThe purpose of this paper is to provide background information to assist providers, consumers and stakeholders who are considering making a submission about the Land Complaint exclusions (for convenience, referred to by their relevant number in the rules, or together, as “the exclusions”).

This paper summarises why the exclusions were originally added to the Scheme, how Utilities Disputes considers they operate in practice, and includes analysis of the grounds advanced in support of the proposal to remove the exclusions.

Round two of consultation is an opportunity for scheme members, stakeholders and the wider community to provide further feedback on the recommendations and to correct us if we have misunderstood anything. All relevant information provided during consultation will be considered by the Board before a decision is made about whether to proceed with the independent review's recommendations.

This paper focuses on the exclusions in clauses 1.1 to 1.11 and 2.1-2.2 in Appendix Two of the Scheme rules. A definitions section is included for general terms at the end of the paper. Some definitions, relevant to a particular exclusion, are set out in the relevant text relating to that exclusion.

Independent review (the review)The review recommended all of the exclusions should be removed, having concluded they "… run counter to the underpinning principle of access to justice, and the exclusion of such complaints represents a significant curtailment on land owner and land occupier's rights to accessible redress." The report noted that the "… extent and scope of the exclusion within the Utilities Disputes scheme documents is unparalleled and significantly constrains the rights of land owners and land occupiers to obtain justice"

In addition, the report recommended five safeguards be introduced:

1. Where the commissioner believes that, all things considered, there is a more suitable forum to consider the complaint then the default position is that it should be referred for consideration by that forum;

2. The test-case clause should be retained. This will enable network companies to seek the judgment of the courts if they believe that it is of significant importance;

3. The maximum value of $50,000NZ is retained;

4. Should the exclusions be removed then Utilities Disputes should only be able to review the actions of network companies that took place after the change date. It should be robust in rejecting old issues packaged as new issues. For clarity, the action complained about must have occurred after the change date; and,

5. Should the exclusions be removed, a review team consisting of Utilities Disputes, Transpower, the Electricity Networks Association, consumer representatives and the relevant Ministry should review its operation after a period of six months to determine if there should be any further change to the scheme rules.

The exclusions are addressed in section 16 of the review.

Background to the exclusionsAs noted above, the exclusions are set out in clauses 1.1 to 1.11 and 2.1-2.2 of Appendix Two of the Scheme rules. In summary, the exclusions operate to prevent the Scheme from considering:

certain land complaints,

18

any complaint, other than a land complaint, that relates to the Services provided by Transpower or a gas lines company involved in the transmission of gas (currently First Gas Ltd), and

any land complaints relating to retailers.

Changes to the Scheme and its jurisdiction came about after the Government issued its Government Policy Statement on Electricity Governance (October 2004) which states:

The Government expects everyone (including potential consumers and owners and occupiers of land) to have access to a free, independent system for resolving complaints about electricity distributors (including Transpower) and electricity retailers, whether or not they have a consumer contract with the retailer or distribution company.

The Government expects the Electricity Commission, in consultation with the Ministry of Consumer Affairs, to ensure a system is in place that meets the Government’s expectations and includes the following features:

A code of practice for electricity distributors and electricity retailers setting minimum standards of conduct

Membership by all distributors (including Transpower) and retailers Robust internal complaints-handling processes within all member companies An independent, external, complaints resolution scheme that meets standard

benchmarks, such as accessibility, independence, fairness, accountability, efficiency and effectiveness

Self-funding by the industry, and Compensation where appropriate

The Government supports the existing Electricity Complaints Commission Scheme and the associated Electricity Consumer Code of Practice. However, not all retailers and distribution companies have joined the scheme and the scheme’s coverage falls short of the expectations set out above.

The Government therefore expects that the Electricity Commission will encourage the industry to develop this scheme further in a way that ensures it is consistent with the Government’s expectations. If the industry is unable to provide an acceptable scheme, the Commission should recommend regulations to introduce a statutory scheme

As noted in the Government Policy Statement, at the time, Scheme membership was voluntary. Governance for the Scheme (and rules approval) was provided by the Council Board, comprising industry company members.

As part of the process a Land Code Working Group (LCWG) was established to incorporate safeguards and represent the Electricity Networks Association (ENA), the Gas Industry Co (GIC) and Transpower. The Scheme provided administrative support to the LCWG.

Following a public consultation process on proposed rules changes, involving the Scheme Amendment Committee, the Council Board conducted a vote with company members. Consumers did not have a vote in the final approval of the changes. The exclusions came into force on 1 October 2006.

Background to the Land CodeTo meet the government’s expectations, the Land Code set out requirements for Transpower and other lines companies that were additional to requirements in the Scheme rules.

The Land Code used to be included in the Scheme rules (then known as ‘The Constitution’), schedule CB, with the same wording as used in Pages 88-99 of this later (2009) version.

Appendix A of the Land Code set out 14 commitments and obligations of Transpower to land owners, occupiers of land and communities where Transpower operated. These included obligations for

19

consultation, notice, mitigation of adverse effects and authority to enter land. Appendix B of the Land Code set out 7 commitments of Gas Transmission Lines companies.

The commitments and obligations in the Land Code, including the appendices, offered some protection for landowners and land occupiers and allowed the Scheme to consider complaints around obligations under Appendices A and B, while the exclusions restricted the Scheme’s ability to consider complaints that met the exclusion criteria. There was no Ministerial involvement in, or oversight or approval of the contents of the Land Code or changes to the Scheme rules.

This changed in 2009, when the Electricity Commission (EC), Gas Industry Company (GIC) and the Minister of Energy, named the Scheme as the ‘approved dispute resolution scheme’ under the Electricity and Gas Acts. A requirement for the approved Scheme was that its governance structure included an independent chair with balanced consumer and industry representation, and mandatory membership. The Scheme, its rules, and the ongoing requirements for approval were confirmed in 2010 upon passing of the Electricity Industry Act 2010.

A further significant change was that the EC considered the content of the Electricity, Gas and Land Codes went beyond the mandate of the EIA for ‘dispute resolution’ as the Codes contained provisions more appropriately set out in minimum terms and conditions of how members should operate. Following consultation, individual companies were given the opportunity to sign up to continuing with the codes. None responded and the Land Code was deleted from the Scheme rules.

The EC and Gas Industry Co developed minimum terms and conditions to pick up much of what was previously in the Electricity and Gas Codes. However, there was no particular regulator responsible, from a consumer point of view, for provisions in the Land Code because it was up to the member companies to volunteer to be part of the Land Code and none did. However, the exclusions remained. It is understood some providers continue to use the engagement steps previously contained in the Land Code, despite the Code’s removal from the rules.

THE EXCLUSIONS The exclusions are in the Appendix Two of the Scheme rules. This part of the paper looks at each exclusion in more detail. Capitalised words or phrases are defined at the end of Appendix Two.

The table below maps the current Scheme document reference to the previous version.

1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 2.1 2.2

B.9.8 a

B.9.8 b

B.9.8 c

B.9.8 d

B.9.8 e

B.9.8 f

B.9.8 g

B.9.8 h

B.9.8 i

B.9.8 j B.9.10

B.9.9 a B.9.9 b

1.1 (Previously B.9.8(a))[Utilities Disputes must not accept a Complaint under General Rule 14(b) or Scheme rule 11] about any dispute as to whether Lines Equipment was lawfully fixed or lawfully installed in terms of section 22 of the Electricity Act 1992 in respect of Electricity Works and section 23 of the Gas Act 1992 in respect of Gas Pipelines.

Why was the exclusion added?Exclusion 1.1 prevents consideration of complaints about whether electricity or gas works were lawfully installed, where construction of lines equipment commenced before 1 October 2006. The underlying principle for this exclusion was that the that the Scheme should not apply retrospectively.

20

Section 22 of the Electricity Act 1992 relates to "existing works" and protects the rights of works owners to have their equipment remain on private land where there is no easement and if those works were installed lawfully at the time.

Section 23 of the Gas Act 1992 is an equivalent provision.

“Existing works” in relation to “works” owned by Transpower means any works constructed or in respect of which construction had commenced before 1 January 1988 and in relation to works owned by any other person, before 1 January 1993.

“Existing fittings” means any “fittings” installed or partly installed, or for which installation had commenced, before 1 January 1993.

The LCWG considered that the Scheme should not apply to disputes relating to electricity lines or gas pipelines that were constructed, or for which construction commenced, before the Scheme was expanded to include landowner complaints. The reason given is, if these kinds of disputes were subject to the Scheme, the Commissioner would be involved in inquiring into events that occurred before the Scheme expanded. This would be unfair to companies and contrary to the principle that the Scheme should not apply retrospectively. LCWG August 2005 draft consultation paper, paras 4.21–4.23.

In addition to the principle of non-retrospectivity, other reasons for excluding from the Scheme disputes about whether works already in place or under construction were lawfully constructed were:

(1) Disputes under s 22 of the Electricity Act and s 23 of the Gas Act, about whether works or fittings have been lawfully fixed or lawfully installed almost always involve complex questions of law and fact. Such disputes also often involve difficult judgements between competing interests, particularly when the evidence on whether works or fittings are lawfully fixed or lawfully installed is not conclusive. The LCWG considered these kinds of disputes not well suited to an alternative dispute resolution, particularly as the Commissioner is not required to have regard to previous decisions. LCWG August 2005 draft consultation paper, paras 4.24–4.25.

(2) Documentation to prove conclusively that works or fittings are lawfully fixed is often either not present or extremely difficult to find. This is because many works and fittings were constructed a long time ago and most companies have gone through many changes since that time. Most electricity lines, for example, were constructed between 25 and 50 years ago. As a result, there can be very large costs to companies simply in responding to complaints. This problem is further complicated by the fact that the landowner wishing to make a complaint will often not have been the landowner at the time the works were constructed. LCWG August 2005 draft consultation paper, para 4.28.

(3) The proposal to exclude disputes about whether works in place or under construction before the expanded Scheme came into force were lawfully fixed or lawfully installed, does not prevent landowners pursuing either of these issues in Court proceedings. LCWG 2005 draft consultation paper, para 4.36.

(4) Transpower says these disputes involve legal, land valuation and technical engineering issues (sometimes historical ones going back decades) that the proposed new scheme will not be resourced to deal with. The outcomes of these disputes can have extremely significant implications for lines companies’ operations across their entire network. (Transpower submission March 2016)

Analysis of the exclusionIt does not appear this exclusion has any continued effect because of the time that has elapsed since it was included and the operation of other Scheme rules:

1. Scheme rule 9 provides Utilities Disputes must only consider a Complaint if Utilities Disputes is satisfied that the act or failure to act that gave rise to the complaint first occurred:

a) In the case of a complaint related to LPG cylinders, on or after 1 October 2014; or

21

b) In any other case, on or after the date that applies to the subject matter of the Complaint under the Limitation Act 2010

Any complaint would need to be related to “Existing Works” or “Existing Fittings”, which, by definition, means works constructed or in the process of construction before 1 January 1993 at the latest (before 1 January 1988 for Transpower). Any dispute about the lawful installation of works prior to 1 January 1993 is well past the 15-year longstop period in the Limitation Act 2010, thereby providing a statutory defence to any claim.

The emphasis on first occurred is important, because any complaint that the lines equipment involves some form of ongoing trespass will be out of jurisdiction, as the complaint timeframe begins to run from the initial act or failure to act.

2. General Rule 15.d) also prevents the Scheme from considering a complaint (unless the provider agrees otherwise) if more than six years have passed from the date the Complainant first became aware or should reasonably have become aware of the circumstances giving rise to the complaint.

3. General Rule 18. a) enables the Scheme to refuse to deal with a complaint if it considers it appropriate, e.g., there is a more appropriate place to deal with the complaint.

4. General Rule 18. f) enables the Scheme to refuse to deal or stop dealing with a complaint if the complainant knew about the circumstances giving rise to the complaint for more than 12 months before making the complaint.

Further, the independent review proposes additional safeguards outlined at page 2 above.

1.2 (Previously B.9.8(b))[Utilities Disputes must not accept a Complaint under General Rule 14(b) or Scheme Rule 11] about any dispute as to whether, in respect of Lines Equipment that was constructed or for which construction commenced before 1 October 2006 but to which neither section 22 of the Electricity Act 1992 nor section 23 of the Gas Act 1992 (as the case may be) apply, a Lines Company holds the legal right for that Lines Equipment to be fixed in, over, under or across Land;

Why was the exclusion added?As with exclusion 1.1 above, exclusion 1.2 reinforces the principle of preventing retrospective consideration by covering circumstances where the protection of section 22 (for electricity) and section 23 (for gas) do not apply. It prevents consideration of complaints about whether a company had the legal right to have lines equipment installed in, under, over or across land.

The exclusion also operates to prevent the Scheme from considering complaints about whether “maintenance” of existing works has substantially changed the nature of the works, i.e. whether lines equipment is new or existing works.

By relating to lines equipment to which section 22 does not apply, this exclusion effectively removes the requirement that the protection applies only to existing works, meaning the timeframes of lines equipment having to be constructed (or commenced) pre-1993 (or pre-1988 for Transpower) do not apply. This exclusion is therefore forward focused, as well as avoiding retrospective consideration.

A reason for exclusion 1.2 was (as with exclusion 1.1) the LCWG’s view the Scheme should not be able to consider land complaints retrospectively, i.e., where the act or failure to act that led to the complaint occurred before 1 October 2006, when the Scheme was expanded. LCWG August 2005 draft consultation paper, paras 4.20–4.23.

22

Other reasons cited by the LCWG are that such disputes almost always involve complex questions of law and fact and difficult judgments between competing interests. LCWG August 2005 draft consultation paper, para 4.24.

The LCWG also noted the proposal to exclude disputes about whether works in place or under construction before the expanded Scheme comes into force are lawfully fixed or lawfully installed, does not prevent landowners pursuing either of these issues in Court proceedings. LCWG August 2005 draft consultation paper, para 4.36.

Analysis of the exclusionAs with 1.1 above, this exclusion was also driven by the principle of avoiding retrospective consideration of complaints prior to 1 October 2006. This no longer applies for the same reasons outlined above given the operation of other rules.

In addition, the following additional considerations apply to 1.2:

1. Under General Rule 18 a), The Commissioner may refuse to deal with a complaint if she considers it appropriate, e.g., there is a more appropriate place to deal with the complaint.

2. The test case procedure (Scheme rules 41-43) is available for providers who believe a complaint involves an issue which may have important consequences for the providers business or businesses like it, or an important or novel point of law. The test case procedure operates to remove the complaint from the Commissioner’s process, whilst allowing for limited Commissioner involvement to ensure the process is properly followed.

3. The independent review proposes additional safeguards outlined at page 2 above.

1.3 (Previously B.9.8(c))[Utilities Disputes must not accept a Complaint under General Rule 14(b) or Scheme Rule 11] about any dispute as to whether or not Lines Equipment constructed before 1 October 2006 or for which construction commenced before that date, is owned by a Lines Company;

Why was the exclusion added?This exclusion prevents the Scheme from considering disputes about ownership of existing works or existing fittings constructed, or for which construction commenced, before 1 October 2006.

As above, a principal reason for this exclusion is to avoid retrospective consideration. LCWG August 2005 draft consultation paper, paras 4.31–4.32.

The LCWG noted disputes sometimes arise about whether particular electricity lines or gas lines are owned by the landowner or the electricity lines company/gas lines company. This is often an important issue because it determines who has responsibility for maintaining those lines. Most frequently, these kinds of disputes arise in relation to electricity service lines (the electricity line that runs from a consumers' point of supply to the distribution or network line). In most cases electricity service lines were constructed by the predecessors to the electricity lines companies. The LCWG noted ownership of most of these service lines has been transferred to landowners. However, not all companies have retained adequate records of the transfers. LCWG August 2005 draft consultation paper, paras 4.29–4.30.

23

The LCWG considered the exclusion appropriate, given the ability for landowners to pursue either of these issues in Court proceedings and for the court to require the company to change its records if the company’s claims were incorrect. LCWG August 2005 draft consultation paper, para 4.36.

Analysis of the exclusionAs with exceptions 1.1. and 1.2 above, it does not appear this exclusion has continued effect in light of Scheme rule 9 and General Rules 15(d) and 18f). Transpower indicated in response to round 1 of consultation that it is content for this exclusion to be removed.

It is difficult to foresee complaints that would fall outside of these rules. For any that could, the independent review proposes additional safeguards outlined at page 2 above.

Some submissions received in round one suggest that exclusion 1.3 was intended to operate to exclude Lines Equipment generally. This is not reflected by the wording of the exclusion that limits application to Lines Equipment constructed or in the process of construction before 1 October 2006.

1.4 (Previously B.9.8(d))[Utilities Disputes must not accept a Complaint under General Rule 14(b) or Scheme Rule 11] about any dispute involving a local authority or other body or person having jurisdiction over a road or level crossing that relates to or arises from the construction or maintenance of Lines Equipment in, on, along, over or across roads and level crossings under sections 24-33 of the Electricity Act 1992 and sections 25-35 of the Gas Act 1992;

Why was the exclusion added?Exclusion 1.4 is about the activities of a lines company over roads, road reserve and railway level crossings. It covers both activities carried out on or over a land owner’s land or carried out in a manner that affects the land owner’s rights i.e. causing a nuisance (noise, dust, fumes), blocking access etc. This exclusion operates to prevent the Commissioner considering land complaints by local authorities and owners and operators of level crossings.

Sections 24 and 25 of the Electricity Act relate to the powers of an electricity operator to construct and maintain works from time to time that are in, on, along, over, across, or under any road. Section 26 of the Electricity Act provides it is an offence if an electricity operator does not comply with s 24 or s 25, with the electricity operator liable on conviction to a fine of $10,000. In addition, the court may order compensation as it thinks fit.

Sections 27-28 deal with appeals to the District Court by the electricity operator regarding conditions imposed under s 24 by a local authority etc. Section 29 provides for appeals to the High Court on questions of law concerning appeals under s 27. Section 31 provides for the electricity operator to seek a District Court order to authorise entry to level crossings where the operator has been unable to negotiate an agreement for entry. Section 32 provides that the local authority etc. (including the New Zealand Transport Agency or the agent of the Minister of Transport) may require works to be moved at their cost, except in certain circumstances where the moving is need because of non-compliance by the owner of the works with certain legislation, in which case the owner is liable for the costs. Cost of work required under s 32 is provided for by s 33. Where there is disagreement about cost, s 33(6) provides for arbitration under the Arbitration Act 1996.

Equivalent provisions are included in the Gas Act (ss 25-35).

24

The LCWG noted (4.45) the monetary limits on the Commissioner's jurisdiction under the current Scheme implicitly recognises that the focus of the scheme is on smaller consumers.

In the LCWG’s view, the same logic applies to the application of the scheme to landowners: its focus should be on smaller-scale disputes and on landowners who would find existing dispute resolution schemes overly complicated, expensive and time-consuming. Given this focus, consideration has been given to excluding large landowners from the Scheme. (4.46).

The LCWG noted many large landowners are well resourced. They are not, generally, the kind of person that schemes of this kind are designed to assist. (4.47). The LCWG felt complaints from large landowners could also "clog" the system because of their complexity or because such landowners raise a large number of disputes.

The LCWG acknowledged a difficulty in defining the term "large landowner" but noted there are two groups for which they felt a distinction can be easily drawn: local authorities (in relation to roads) and owners and operations of level crossings) (4.49-4.51). In relation to local authorities, the Electricity Act and the Gas Act include specific provisions dealing with construction, maintenance and moving of electricity works and gas fittings on roads. It was therefore the LCWG’s view, it is not appropriate that disputes arising under these sections should be dealt with by the Scheme, which they considered is aimed at private landowners to resolve disputes they have with electricity lines companies and gas lines companies. One further conclusion the LCWG drew was it is not appropriate for public bodies to also be able to take advantage of the Scheme (4.52).

One submitter noted in Round 1, these are covered with provisions in the National Code of Practice for Utility Operators’ Access to Transport Corridors and therefore it does not seem an efficient or practical use of Utility Disputes’ resources to duplicate this work.

Analysis of the exclusionTranspower indicated in response to round 1 of consultation that it is content for this exclusion to be removed.

In most scenarios, a land owner would be affected directly by the actions of the lines company and therefore this dispute is unlikely to necessarily ‘involve’ a local authority. The local authority’s only involvement may be owning or operating the land on which the lines company is carrying out its actions.

Whether a local authority is ‘involved’ would need to be determined on a case by case basis. If the activities giving rise to the dispute have been permitted or sanctioned by the local authority then aspects of it may be outside jurisdiction, as a complaint more appropriately dealt with in the forum dealing with complaints about that local authority.

It is unclear what the LCWG meant when it considered it inappropriate for public bodies to also be able to take advantage of the Scheme. One potential reason was the LCWG’s concern that such disputes involve weighing different public interests.

This exclusion has not previously been used to exclude a ‘large landowner’ from making a Land Complaint. No provider or member has ever used this exclusion to prevent the Commissioner considering a complaint by a local authority. No data has been made available as to how providers handle complaints they receive that would be covered by exclusion 1.4.

Two important safeguards ameliorate the risks claimed by submitters – the Commissioner’s discretion to decline to consider or consider further a complaint if there is a more appropriate forum, and the proposed safeguard proposed by the reviewers, to fetter the discretion by requiring the Commissioner to refer a complaint to that forum when satisfied it applies in the circumstances.

The size of a dispute, rather than the relative size of a landowner, will continue to be relevant and managed by the claim limits in the Scheme Rules (Rule 7).

25

1.5 (Previously B.9.8(e))[Utilities Disputes must not accept a Complaint under General Rule 14(b) or Scheme Rule 11] about any dispute relating to or arising from the negotiation for, or other process of, obtaining any interest in Land in relation to Lines Equipment, including under the Resource Management Act 1991 or the Public Works Act 1981;

Why was the exclusion added?This exclusion relates to designations under the Resource Management Act (RMA) and the acquisition of land under the Public Works Act (PWA). It operates to prevent the Commissioner from considering disputes relating to or arising from the negotiation or process of obtaining interests in land in relation to lines equipment.

Exclusion 1.5 may operate to exclude Utilities Disputes from considering customer service matters that may arise during the process and complaints about the complaint-handling process the lines company uses to address any complaints that are made.

The LCWG noted disputes involving the designation of land under the RMA, and whether land should be compulsorily acquired and the value of that land (whether acquired compulsorily or by agreement) under the PWA involve the consideration of wide-ranging issues such as the effect on the regional environment and where the overall public benefit lies. The LCWG noted sometimes in such situations the interests of individuals must be compromised for the wider public benefit. (LCWG August 2005 draft consultation paper, para 4.37)

The LCWG considered the potential to revisit and undermine a negotiated position creates uncertainty and could inappropriately scrutinise business and commercial decisions after the fact.

The LCWG did not consider it appropriate for this kind of balancing judgment to be made by the Commissioner. In addition, it was considered the Commissioner’s office did not have the kind of resources to fully take into account all the material that is relevant in such cases. The LCWG believed significant additional cost would be involved in hiring and up-skilling the Commissioner’s staff to deal with these kinds of complaints. (LCWG August 2005 draft consultation paper, paras 4.37–4.38.)

The LCWG noted most of the decisions taken in designations and acquisition are made by Ministers of the Crown or territorial authorities. The LCWG considered the Scheme should not deal with disputes that landowners have with these bodies. LCWG August 2005 draft consultation paper, para 4.39.

The LCWG also noted, if an acquisition of land is approved by the Minister of Lands, electricity lines companies and gas lines companies must attempt to negotiate before it can be compulsorily acquired. This is often the only stage of acquisition where companies and landowners deal directly. The only legal requirements that apply to the negotiation are that the companies must make every endeavour to negotiate and to negotiate in good faith. These matters are verified by the Minister of Lands, if compulsory acquisition is sought. If the requirements are not met, then the Minister cannot move to acquire the land. The LCWG questioned the Commissioner’s role in this situation, given there is no power to make determinations that affect the Minister. LCWG August 2005 draft consultation paper, para 4.40.

Analysis of the exclusionThe Environment Court will likely be the appropriate forum to deal with issues falling under this exclusion. Section 24 of the PWA provides that the Environment Court has jurisdiction to hear objections to land being acquired under the PWA. Sections 185 and 186 of the RMA deal with the Environment Court’s powers to require a network utility to acquire land under the PWA.

26

The independent review proposes a safeguard that would likely apply to complaints relating to exclusion 1.5 that where the commissioner believes that, all things considered, there is a more suitable forum to consider the complaint then the default position is that it should be referred for consideration by that forum.

However, there are aspects of complaints captured by the exclusion that may be appropriate for the Scheme to consider, such as customer service elements that may arise during the process and complaints about the complaint-handling process the lines company uses to address any complaints that are raised. These are matters landowners would be unlikely to use the environment court to address, either in isolation or as part of a wider claim. A rule automatically excluding them therefore potentially impacts on accessibility.

Lines companies can use this exclusion to prevent customer service complaints being heard by Utilities Disputes arising out of its negotiations with land owners. This means land owners are being treated differently to consumers generally, where consumers are entitled to make a complaint about the conduct of a provider during the negotiation of a contract, but a land owner is unable to because of this exclusion. The Commissioner is able to (and does) consider complaints about provider compliance with contractual obligations after they are agreed with consumers.

There is also potential this clause operates to prevent the Commissioner from undertaking her role of deciding whether a complaint is in jurisdiction (GR16). For example, lines companies may treat all aspects of a complaint as falling under the exclusion and therefore not inform the complainant about the scheme or take other required complaint-handling or promotional steps under the rules.

1.6 (Previously B.9.8(f))[Utilities Disputes must not accept a Complaint under General Rule 14(b) or Scheme Rule 11] about any dispute relating to or arising from a refusal to grant a dispensation under regulation 20 of the Electricity (Hazards from Trees) Regulations 2003 or the terms of a dispensation granted under regulation 20;

Why was the exclusion added?Exclusion 1.6 operates to prevent Utilities Disputes considering complaints about dispensations granted or not granted by lines companies under the Electricity (Hazards from Trees) Regulations 2003.

Regulation 20 concerns the giving (or not) of dispensations by a works owner to a tree owner (as requested by the tree owner under regulation 19) with respect to a requirement that the tree owner trims their tree. Under Regulation 22, a tree owner may apply to an arbitrator to determine a dispute regarding a dispensation application under regulation 20. The tree owner must apply to the arbitrator no later than 5 working days after the tree owner received notice from the works owner under regulation 20(1) about an application for a dispensation (regulation 22(2)). After receiving an application under regulation 22, an arbitrator must use their best endeavours to determine a dispute within 10 working days after receiving it (regulation 32(5)). The Minister appoints arbitrators for the purposes of the Regulations (regulation 29).

The LCWG considered it did not make sense for the Commissioner to consider landowner disputes where there is already an alternative dispute resolution mechanism in place. These kinds of disputes can already be referred to specialist arbitrators, funded by the Government through a levy on companies. Landowners do not pay to use this service. (LCWG August 2005 draft consultation paper, paras 4.42–4.44.)

Analysis of the exclusion

27

Exclusion 1.6 overlaps with other rules that would apply to such complaints to limit the Commissioner’s jurisdiction. Transpower indicated in response to round 1 of consultation that it is content for this exclusion to be removed.

General Rule 15.c) says: “Unless the Provider agrees otherwise, UDL must not accept a Complaint for consideration…if the subject matter of the Complaint is being, or has already been, dealt with in a proceeding brought by the Complaint before a court, tribunal, arbitrator…”. As the subject matter of the dispensation would already have been dealt with by an arbitrator, these complaints would already be excluded.

However, if the provider wants the Commissioner to consider the complaint (for example to avoid the costs of arbitration) Rule 15.c allows this by giving the provider discretion to allow the Commissioner to consider the complaint. This discretion is unfettered as there is no obligation for a provider to agree. By retaining exclusion 1.6, the Commissioner is unable to consider complaints about dispensations, even where the provider may want to exercise their discretion to allow it.

Because the applicable regulations provide an alternative forum, General Rule 18.a) applies, which states:

“UDL may refuse to deal, or stop dealing, with a Complaint if UDL consider is appropriate. Examples include…where there is a more appropriate place to deal with the complaint”

An alternative, free dispute resolution mechanism would in most cases appear appropriate, in which case the Commissioner would refer these types of complainants there. Unlike other exclusions, which have a prescribed court process to address issues, the free process would be within reach of consumers to address complaints, for example about customer service or the complaint handling process.

As with exclusion 1.5, with this exclusion in place there is also potential this clause operates to prevent the Commissioner from undertaking her role of deciding whether a complaint is in jurisdiction (GR16).

1.7 (Previously B.9.8(g))[Utilities Disputes must not accept a Complaint under General Rule 14(b) or Scheme Rule 11] about any dispute as to whether the maintenance programme carried out by a Lines Company on Lines Equipment is adequate or reasonable;

Why was the exclusion added?Exclusion 1.7 operates to prevent Utilities Disputes considering a complaint about whether a lines company's maintenance programme is adequate or reasonable.

This exclusion was added because the LCWG considered it inappropriate for landowners to be able to question whether lines companies' maintenance programmes are reasonable, for example, by questioning whether the number of inspections per year is appropriate. The LCWG believed such second guessing by the scheme would undermine maintenance and safety standards and maintenance programmes should be for companies to decide, in accordance with good industry practice. LCWG August 2005 draft consultation paper, para 4.79.

Another view in support of the exclusion is that Worksafe, or the Electricity Authority and/or Commerce Commission are better placed to consider such questions.

Analysis of the exclusion

28

This exclusion is limited in scope. It does not operate to prevent a complaint about damage to land or safety arising from a maintenance issue. When considering such complaints, the Commissioner may consider the adequacy or reasonableness of a maintenance programme to determine whether a lines company has been negligent or not (where damage is claimed). However, the dispute itself may not be about whether the maintenance programme is adequate or reasonable.

In some circumstances, the Commissioner may believe Worksafe is a more appropriate forum to consider whether a provider’s decision on maintenance has created a safety issue. If a party is claiming there is a more appropriate forum, the Commissioner has a reasonable expectation the party would provide relevant reasons why, including how it proposes to address any elements of the complaint the alternative forum is not able, or best placed, to address.

Further, GR18(b) excludes complaints where a complainant does not have sufficient interest in the subject matter of the complaint. Preventing a complainant making a complaint about something that does not directly affect them is an appropriate threshold. This should address concerns the Commissioner would consider complaints by “officious bystanders”.

Similar to the impact of other exclusions, there is potential this clause operates to prevent the Commissioner from undertaking her role of deciding whether a complaint is in jurisdiction (GR16).

1.8 (Previously B.9.8(h))[Utilities Disputes must not accept a Complaint under General Rule 14(b) or Scheme Rule 11] about any dispute as to whether or not a replacement or upgrade of an Electricity Work causes Land to be injuriously affected in terms of section 23(3)(b) of the Electricity Act 1992;

Why was the exclusion added?This exclusion operates to prevent the Scheme considering complaints about whether replacement or upgrade of an Electricity Work by lines companies has injuriously affected landowners or land occupiers.

Transpower advised in its 9 December 2005 submission that the intention behind exclusion 1.8 was that consideration of injurious affection involves complex economic questions the scheme is not resourced to determine. Transpower considered that what does and what does not constitute injurious affect should be determined in a court.

Transpower submitted that the meaning of injurious affect in the context of s 23(3)(b), and the Electricity Act generally, is yet to be tested legally, but is of fundamental importance to Transpower. Transpower’s view, drawing on the way the same words have been interpreted in the context of the PWA, is that land is injuriously affected only if there is a permanent reduction in its value. This interpretation is supported by the connection made in s 57 of the Electricity Act between compensation for injurious affect and the procedural provisions of the PWA.

Based on this, Transpower considered issues of injurious affect under the Electricity Act should be excluded from the Scheme for the same reason as PWA valuation issues are excluded – they involve complex economic questions that the Scheme is not resourced to determine.

Analysis of the exclusionThe impact of this exclusion is limited because of the operation of other Scheme rules:

1. Under General Rule 18 a), The Commissioner may refuse to deal with a complaint if she considers it appropriate, e.g., there is a more appropriate place to deal with the complaint.

29

The Environment Court is likely to meet these requirements for the aspects of the complaint relevant to its jurisdiction.

3. The claim limit in SR 7 will prevent complaints involving injurious affection claims over $50,000 being dealt with by the Scheme unless the provider agrees to extend this amount to $100,000. Because the claim amount limit includes the reasonable costs for the provider in carrying out any actions that may reasonably be required, most complaints would be outside of jurisdiction, regardless of whether there is temporary or permanent reduction in land value.

While a court can appropriately deal with land value claims greater than $50,000, there will be smaller claims with a disproportionately significant impact on the land owner. For those complaints, the Scheme is adequately resourced to competently interpret and apply legal precedent when applicable.

There is also potential this clause operates to prevent the Commissioner from undertaking her role of deciding whether a complaint is in jurisdiction (GR16).

The independent review proposes safeguards including that where the commissioner believes that, in the circumstances, there is a more suitable forum to consider the complaint then the default position is that it should be referred for consideration by that forum.

1.9 (Previously B.9.8(i))[Utilities Disputes must not accept a Complaint under General Rule 14(b) or Scheme Rule 11] about any dispute as to whether any changes to Lines Equipment carried out in the exercise of powers under the Electricity Act 1992 or the Gas Act 1992 have injuriously affected Land in terms of section 57(1) of the Electricity Act 1992 or section 51(1) of the Gas Act 1992, including disputes about the amount of compensation that may be payable in relation to such injurious affection. This clause does not exclude disputes about whether or not a Lines Company has complied with any obligation it may have to mitigate or repair damage to Land or property in or under any of the Acts or regulations referred to in the definition of "Land Complaint" in the Scheme, or a Land Agreement;

Why was the exclusion added?This exclusion operates to prevent the Scheme considering complaints about changes to lines equipment by lines companies and whether they have injuriously affected landowners or land occupiers. It also prevents consideration of disputes about whether compensation may be payable.

The exclusion does not prevent the Scheme considering a complaint about a lines company’s obligation to mitigate or repair damage to land or other property under legislation, regulations or land agreements.

According to Transpower (from their 9 December 2005 submission) the intention behind exclusion 1.9 (as with 1.8) was that consideration of injurious affection involves complex economic questions the scheme is not resourced to determine. Transpower believed that what does and what does not constitute injurious affect should be determined in a court.

Analysis of the exclusionAs with exclusion 1.8, this exclusion is limited by the operation of other Scheme rules. Under General Rule 18 a), The Commissioner may refuse to deal with a complaint if she considers it appropriate, e.g.,

30

there is a more appropriate place to deal with the complaint. The Land Valuation Tribunal is likely to meet these requirements for the aspects of the complaint relevant to its jurisdiction.

The claim limit in SR 7 will prevent complaints involving injurious affection claims over $50,000 being dealt with by the Scheme unless the provider agrees to extend this amount to $100,000. Because the claim amount limit includes the reasonable costs for the provider in carrying out any actions that may reasonably be required, most complaints would be outside of jurisdiction, regardless of whether there is temporary or permanent reduction in land value. This prevents complainants from avoiding the financial limit by seeking declaratory or otherwise unvalued terms.

While a court can appropriately deal with land value claims greater than $50,000, there will be smaller claims with a disproportionately significant impact on the land owner. For those complaints the Scheme is adequately resourced to competently interpret and apply legal precedent when applicable, for example when considering a complaint about a lines company’s obligation to mitigate or repair damage to land or other property under legislation, regulations or land agreements.

1.10 (Previously B.9.8(j))[Utilities Disputes must not accept a Complaint under General Rule 14(b) or Scheme Rule 11] about any dispute relating to the quality of electricity or Gas supplied by a Lines Company to a Consumer, or any interruption in the supply of electricity or Gas or the provision of Line Function Services;

Why was the exclusion added?This exclusion operates to prevent the Commissioner from considering complaints about quality of supply or interruptions in supply of electricity or gas or line function services by lines companies.

Complaints about lines function services can still be made about lines companies. This clause prevents them being considered as land complaints. However, complaints about lines function services by Transpower or First Gas are still excluded by exclusion 2.1, which only allows complaints under General Rule 14(b) or Scheme Rule 11 o be made about Transpower or First Gas.

It is not clear whether this was Parliament’s intention when it enacted the Electricity Industry Act, given it chose to explicitly exclude complaints about Transpower’s role as system operator.

This clause is similar in scope to exclusion 2.1 by excluding complaints about electricity supply by consumers directly against Transpower.

Transpower has previously submitted this exclusion is appropriate because it does not provide services to consumers (except for large direct connection consumers, such as the Tiwai Aluminium smelter in Bluff). Transpower considers lines companies have a direct supplier-customer relationship and a direct physical connection, and therefore this enables all other lines companies to negotiate limitations or exclusions of liability with consumers.

Transpower also submits that under the Consumer Guarantees Act (CGA) consumers’ recourse is only against their electricity retailer and therefore giving direct recourse against Transpower would be inconsistent with the CGA. However, this does not take into account that the CGA will not always apply.

The LCWG considered (para 4.81) most consumer contracts provide retailers and lines companies with rights of access to maintain and operate equipment, such as meters and other equipment, whether owned by the consumer or provider. It appears on this basis, the LCWG were comfortable consumer had access to redress about these issues. The LCWG mention the electricity and gas codes of practice as requiring provisions for access, although these are no longer part of the rules, as set out earlier in this paper.

31

Transpower further submits that the exclusion should be retained because it does not have the systems or personnel necessary to deal with a large number of consumer complaints, where lines companies do.

Analysis of the exclusionConsumers already have access to the Scheme through the definition of “Complaint” in the Scheme Document and are therefore able to complain about quality and interruption of supply and are not affected by the exclusion in clause B.9.8 (j).

There is potential that the exclusion is not supported by the Electricity Industry Act and that allows for different treatment for Transpower compared with other lines companies. Most lines companies do not have direct consumer relationships and instead work with third parties.

The legislation is clear in its language as to the extent of expected coverage for the scheme (for example, excluding jurisdiction to consider complaints about Transpower’s role as system operator). There are obligations on every provider under the Scheme rules to have and comply with a documented complaints process appropriate to the nature of their services and scale of their operations (GR 12 (b)).

There is also potential this clause operates to prevent the Commissioner from undertaking her role of deciding whether a complaint is in jurisdiction (GR16).

The requirements under the Act envisage complaints being made about Transpower. While court may be appropriate for many cases, smaller claims may go unheard as a result of this exclusion.

Self-reviews show Transpower does receive complaints, showing some consumers are aware of the ability to complain about their interactions with Transpower. As a result, consumers should also be aware of Utilities Disputes. For complaints that fall under the exclusions, Transpower may not follow the requirements for promoting the scheme. This however prevents Utilities Disputes from undertaking what the some refer to as Utilities Disputes’ system steward role, in educating consumers and providers and preventing complaints for the overall good of industry and consumers.

Utilities Disputes encourages any submissions in relation to this exclusion to provide detail as to the impact of removing the exclusion, particularly given the rules preventing Utilities Disputes from having jurisdiction until providers have had reasonable opportunity to resolve complaints they receive

1.11 (Previously B.9.10)[The Commissioner must not accept a Complaint under General Rule 14(b) or Scheme Rule 11] relating to a Retailer.

Why was the exclusion added?Exclusion 1.11 aims to prevent the Scheme considering land complaints about retailers. As noted above, a land complaint is a complaint about the unlawful effect on their rights of a Lines Company’s actions when exercising, purporting to exercise or failing to exercise rights, powers or obligations claimed by the Lines Company under any applicable gas or electricity legislation or regulation, or under an access agreement granted to the Lines Company by the owner or occupier.

The LCWG noted any disputes that landowners have with retailers will be in the context of consumer contracts, which contain land access provisions giving retailers rights of entry to the customer’s property (e.g., to maintain and operate meters). Given that (in 2005 when consideration was being given to expanding the EGCC Scheme to include landowner complaints) the Scheme already applied to any disputes arising in relation to the land access provisions in consumer contracts, it was considered that the (expanded) Scheme should distinguish between rights and obligations under land agreements, such as easements, and rights and obligations relating to land access under consumer contracts. LCWG August 2005 draft consultation paper, paras 4.13–4.15 and 4.81–4.83.

32

Analysis of the exclusionThe operation of exclusion 1.11 is limited in scope and Transpower indicated in response to round 1 of consultation that it is content for this exclusion to be removed.

Complaints about retailers carrying out actions affecting a land owner’s land rights are already covered under the ordinary definitions of “Complaint” and “Services”.

The definition of “Complaint” is broader in scope than it was when land complaint jurisdiction was added. It has, for many years, meant that a complaint does not need to be tied to a consumer contract. The distinction between rights and obligations under land agreements, such as easements, and rights and obligations relating to land access under consumer contracts is therefore no longer material.

If a complaint raised issues that fall under the scope of what was previously defined as a land complaint (the wording and meaning has remained the same but there is no longer a definition in the rules) it will necessarily meet the criteria for being a complaint.

In the Scheme rules (SR Definitions) Services is defined as “goods or services provided by a retailer, or line function services.”

Any complaint against Transpower (and equivalent providers for gas), other than a land-related complaint, could likely be handled through the Indemnity Disputes provisions of the Consumer Guarantees Act (Indemnity Disputes are considered by the Scheme). Given the investigation involved in an indemnity dispute it makes sense in this context for complaints to be considered through the Scheme as well.

2.1 and 2.2 (Previously B.9.9 (a) and B.9.9 (b))[Utilities Disputes must not accept a] any complaint, other than a Complaint under General 14(b) or Scheme Rule 11, that relates to the Services provided by Transpower; or relates to the Services provided by any Gas Lines Company Scheme Member in the transmission of Gas by Gas Transmission Pipelines.

Why was the exclusion added?In response to earlier submissions, Transpower submitted the same reasons for adding exclusion 1.10 apply to exclusion 2.1, namely it is not appropriate to expose Transpower (or gas transmission providers) to consumer complaints because:

Transpower has no supplier-customer relationship with electricity consumers (other than a few very large ones who are directly connected to the grid) and accordingly has no ability to manage its liability to them or systems to deal with complaints.

Exposing Transpower to consumer complaints would be inconsistent with the regime in the Consumer Guarantees Act 1993 whereby consumers only have remedies against their suppliers (retailers or lines companies), and if any liability is sheeted home to Transpower it happens through the retailer indemnity.

Analysis of the exclusionCurrently consumers without recourse through the Consumer Guarantees Act 1993 may, in certain circumstances, still seek a remedy in negligence from their lines company. The removal of this exclusion may better meet the Government’s intentions and purpose of legislation by providing:

greater accessibility for consumers by being able to make a complaint directly against Transpower for services provided by Transpower (other than in their role as system operator);

33

greater accountability by Transpower, as Transpower can manage its liability under tort by ensuring it does not act negligently (an exclusion in the Scheme rules is not an appropriate place for Transpower to attempt to limit its liability in negligence); and

fairness amongst members, through the Scheme’s jurisdiction applying equally to Transpower and lines companies where appropriate, for example, not in relation to Transpower’s role as system operator

Exclusion 2.1 serves the purpose of making it clear the Scheme can only consider a land complaint about Transpower. Consumers with service (i.e., quality of supply) complaints about Transpower are likely to be able to pursue their complaints against their retailer or distributor. Transpower is subject to the Scheme’s indemnity dispute jurisdiction.

Other views in support of the exclusions generallyThis part of the paper summarises general comments in support of retaining the exclusions received from submitters as part of round one. They are included here to assist submitters for round two.

The exclusions were approved by the Minister Current avenues for legal redress are satisfactorily meeting the needs of consumers There would inevitably be an increase in legal challenges to decisions involving land

complaints Utilities Disputes does not have the capacity or capability There is no equivalent land complaint exclusions in UK and Australian schemes because they

do not apply to transmission providers and, in general to land complaints There is risk of the strict legal position (and therefore legal rights) being ‘watered down’ as

part of the overall balancing exercise to reach a fair and reasonable outcome and Utilities Disputes is not bound by precedent nor any legal rule of evidence

Their removal will result in the dispute resolution scheme complaints process being used to stop or disrupt transmission infrastructure projects, with enormous time and cost implications

The corollary of the assertion in the [2016] consultation paper is that the dispute resolution scheme contemplated in the Electricity Industry Act cannot have any jurisdictional exclusions unless the Electricity Industry Act refers to them specifically. If that is the case, then how is the $50,000 financial limit or Deadlock rule permissible? How are any of the jurisdictional limitations permissible?

At the workshop on 7 March [2016] there was reference to advice from MBIE that “legislative changes” now mean that the Transpower and land complaint jurisdictional exclusions are illegal. That is not mentioned in the consultation paper and no further information has so far been provided about it by the EGCC Board. We are not aware of any legislative changes that would have had that effect.

Providers do not have a right of appeal from a Determination in circumstances where the Determination may not reflect the strict legal position, the result could be particularly harsh and unsatisfactory to the provider.

Land complaints have wide legal implications. There is risk of Land Complaints without merit being lodged against lines companies as a

Complaint can be lodged at no cost and with little effort; an investigation is conducted by Utilities Disputes at no cost to the Complainant; there is no risk in the outcome as a Determination is not binding on the Complainant unless accepted and, if not, the Complainant is free to pursue any remedy in any other forum (General Rule [36]).

Many Land Complaints would exceed the $50,000 limit; however, it is expected that so as to assess the value of a particular claim Utilities Disputes would delve into the substantive Land Complaint, causing inconvenience, delay and cost to the provider

Health and safety implications and delays to operations and processes.

34

Definitions:Land Complaint is included in the Scheme rules as “a Complaint about the unlawful effect on their rights of a Lines Company’s actions when exercising, purporting to exercise or failing to exercise rights, powers or obligations claimed by the Lines Company under any applicable gas or electricity legislation or regulation, or under an access agreement granted to the Lines Company by the owner or occupier.” (SR11)

Land includes any estate or interest in land

Land Owner means, in relation to the Land that is held under:

a) the Land Transfer Act 1952, the person(s) that own(s) the Land in fee simple;

b) the Land Act 1948, the Crown; and

c) any other statute, the legal and beneficial owner of the Land (as appropriate) as specified in that statute.

Land Occupier means either:

a) an inhabitant occupier of the Land; or

b) any person who has a right to occupy the Land under a lease, sub-lease, or licence granted by the Land Owner or another Land Occupier.

Line Function Services in the case of:

a) electricity, has the meaning set out in section 2 of the Electricity Act 1992 and as further provided for in contracts with Consumers, and includes metering services where an electricity Lines Company provides these services; and

b) gas, has the meaning set out in section 2 of the Gas Act 1992 and as further provided for in a contracts with Consumers, and includes metering services where a gas Lines Company provides these services.

Lines Company has the same meaning as Distributor, which is a business engaged in distribution

Retailer means, in the case of:

a) electricity, a retailer as defined in the Electricity Industry Act 2010; or

b) gas, a gas retailer as defined in the Gas Act 1992.

35

Introduction and background to the Five Year Independent ...€¦ · Web viewQueen Margaret...

Documents

Transcript of Introduction and background to the Five Year Independent ...€¦ · Web viewQueen Margaret...