Otago power consumer price hikes in pipeline

Saturday, 16 November 2019

A linesman works on a power pole in Cromwell as part of Aurora Energy's Fast Track pole programme.

Otago power consumers may soon know how much extra they will need to pay to a struggling lines company.

Aurora delivers electricity to 90,000 customers in Dunedin, Central Otago and Queenstown Lakes and is set to unveil a new draft pricing structure for customers on Tuesday.

The Dunedin City Council-owned lines company had applied to the industry regulator, the Commerce Commission, to switch to a customised price-quality path (CPP) to fund future investment across its network to ensure the reliability of supply.

It would not be drawn on the expected increase, which Stuff previously reported could be as high as $500, but confirmed a draft proposal would be released to the public this month.

Aurora Energy chief executive Richard Fletcher at a meeting earlier this year.

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A Commerce Commission spokeswoman said it was aware Aurora planned to start consultation on its CPP application next week.

Price-quality paths set revenue and quality standards for a company, but do not set the price the company charges consumers, she said.

Three other lines companies – Wellington Electricity, PowerCo and Orion – have previously applied for a CPP.

In Wellington that led to an increase of about $1.70 on a monthly power bill of $180 from 2018-21, while a PowerCo consumer with monthly power bills of $210 would pay an increase of $2.70 across a five year period.

This year the company recorded a net operating loss of $10.9 million, including a $5m provision for potential financial penalties prompted by a Commerce Commission investigation.

The investigation was for breaching regulated quality standards in 2016 and 2017. The final penalty is yet to confirmed, with the matter before the courts.

The company's annual report noted it was required to complete a CPP, given the level of future network investment it was proposing.

Aurora last year announced it would invest $748 million over 10 years on new developments and to upgrade its ageing infrastructure, including replacing old power poles and other ageing infrastructure across the province.

The company hit headlines earlier this year over ballooning costs and salaries.

The company's annual report – released by Dunedin City Holdings Ltd, an investment company owned by the council – revealed 48 employees were paid more than $100,000 a year, including six paid more than $200,000.