Electricity giant Vector has backed down on moves the Commerce Commission say "would have cost its customers millions of dollars over the coming decades" after an investigation.
The Commission's deputy chairperson Sue Begg said the investigation began two years ago.
A statement from the Commerce Commission today explained the issue.
"In March 2020, Vector entered into the transactions involving two of its wholly-owned subsidiaries, selling its CBD tunnel and a portfolio of substation land and building assets, then leasing those assets back from its subsidiary companies.
"In the Commission's view, Vector's approach to valuing those transactions was inconsistent with regulatory rules under the Commerce Act 1986," the statement read.
But the company reversed its regulatory treatment of sale and leaseback transactions - which the Commission said had resulted in a $300 million asset revaluation - after engagement with the Commission.
"This revaluation would have enabled the company to significantly increase charges to consumers, without providing any service improvements or infrastructure investment," the statement read.
Vector has now received a formal warning letter from the Commission.
"Vector considers that a warning letter is disproportionate to the relevant conduct and a compliance advice letter would be the most appropriate enforcement response," the letter notes.
It also lists a number of mitigating factors, including Vector's cooperation with the investigation and its ultimate reversal.
"It is a good outcome for consumers that Vector has reversed its regulatory treatment of its transactions, which has removed the potential impact of higher costs on their electricity bills," Begg said.
"We acknowledge Vector's cooperation with our investigation and its constructive approach towards engagement.
"This should send a strong message to all regulated suppliers that we will act to protect consumers from price increases that can't be justified," she added, also encouraging other regulated suppliers to engage with the Commission when planning similar moves.
'We worked hard to resolve this matter of interpretation'
In response to the findings, Vector issued a statement stressing that "neither the original regulatory disclosure of the transactions, nor the reversal of these, has had any impact on prices for customers".
The company said the moves were intended to separate its land and buildings into separate subsidiaries so they could be commercialised and "create opportunities for future capital raisings".
CEO Simon Mackenzie said: "We worked hard to resolve this matter of interpretation with the Commission including proactively sharing expert legal and accounting advice.
"We will always consider options to enable us to continue to fund the investments we need to make to meet the challenges of increased demand brought about by the growth of Auckland and the response to climate change, while creating a cleaner energy system that is reliable and affordable for our customers."
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