19 Oct 2018

Electricity hikes loom as Aurora addresses fixes

3:37 pm on 19 October 2018

Historical under-investment in Aurora Energy's lines network is set to hit consumers in the pocket from 2021.

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It was revealed today more than 1000 red-tagged poles remained on the network and would be replaced in the coming year. Photo: RNZ / Claire Eastham-Farrelly

The Dunedin City Council-owned electrical lines company revealed its 10-year plan to spend about $750 million to provide a safe and reliable network for the residents of Dunedin, Central Otago and Queenstown Lakes.

The network's issues were revealed in 2016 when staff-member-turned-whistleblower Richard Healey walked away from the company.

Chief executive Richard Fletcher, who joined the company this year, said line charges would have to increase to pay for renewing the network.

Lines charges are fixed by the Commerce Commission and any increase above the standard allowance would require commission approval.

Mr Fletcher said it was Aurora's intention to begin that process next year to allow for increased charges to come into effect by April 2021.

It was revealed today more than 1000 red-tagged poles remained on the network and would be replaced in the coming year.

"Past under investment over several decades has resulted in some network assets being in poor condition and in need of renewing," Mr Fletcher said.

"Our focus now is on bringing the most critical assets under control in the short-term, while ensuring future security of supply and supporting regional growth in the long-term. We are making good progress."

The company's lines service 90,000 customers in Dunedin, Central Otago and Queenstown Lakes.

It is the subject of two Commerce Commission court actions relating to the network's reliability in 2016 and 2017, and the network's performance this year is also under investigation.

The company is wholly-owned by Dunedin City Holdings, a council-controlled company, which in the past benefited from dividends paid by Aurora and its sister-company Delta.

No dividends would be paid in the foreseeable future, while Dunedin City Holdings was also increasing its debt to help finance the network's renewal.

Those factors would be coupled with the likely power hikes faced by ratepayers from 2021.

When asked if the company remained good value for the city's ratepayers, Mr Fletcher said it was a "valid question" but not one he could answer and he directed the query to Dunedin City Holdings Limited's chairman, Graham Crombie.

Attempts to contact Mr Crombie have been unsuccessful so far.

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