Aurora Energy calls for customer views on $400 million three-year investment plan
19 Nov 2019
Aurora Energy Chief Executive Dr Richard Fletcher is inviting customers to have their say on a draft proposal to tackle ageing electricity infrastructure in Dunedin, Central Otago and Queenstown Lakes and ready the network for the future.
The proposal, launched today, outlines a three-year $400 million programme to continue essential investments, maintenance and upgrades to improve the safety, reliability and resilience of the Aurora Energy electricity network.
“Our proposed plan is about the prudent investment that is essential to meet the needs of our communities now and into our future, to address the errors of the past and position the network for its future use,” said Dr Fletcher.
The proposal can be found at yoursay.auroraenergy.co.nz and provides an indication of what customers are likely to pay in line charges during the three-year period 2022-2024.
“Aurora Energy acknowledges the price rises required to fund this work will be difficult for some customers who will be required to pay more for the energy delivered to their homes and businesses. However, the alternative to raising prices is a continued deterioration in the safety and the reliability of the networks that power our communities.”
“The duty of the current Aurora Energy team is to tackle the challenges created by historic underinvestment head on and develop the networks to improve safety and reliability, cater for growth and prepare for the future. In Aurora Energy’s case, low levels of investment in the intervening decades has helped keep line charges lower than the national average but has led to a gradual deterioration of the electricity networks which power our communities and economy.
“New Zealanders are transitioning to a future that will be heavily reliant on electricity. Globally, all indications are that over the next 30 years developed economies will transition out of fossil fuels and into renewable energy technologies such as electric vehicles, rooftop solar and energy battery storage as we look to reduce carbon emissions. Electricity networks will enable this transition to a low carbon future. In cases like ours, where the network has aged, infrastructure will need to be renewed and, in some cases, replaced and reinforced.”
“While there is some scope to modify our proposal before we submit it in June 2020 to our sector regulator the Commerce Commission, it’s important to be clear that there are some key safety and renewal investments that simply have to be done.”
The proposal outlines estimated increases in residential line charges of up to $21 a month in year one followed by up to $10 a month in year two and up to $10 a month in year three to fund a significant increase in network and related system upgrades and maintenance.
Aurora Energy’s lines charges form only a proportion of a total electricity bill (around a quarter of an average residential power bill). We estimate that across the entire network (Dunedin, Central Otago/Wanaka and Queenstown), as a result of the CPP, the monthly total electricity bill will increase on average by 18% for residential households. This is an estimate only and will be dependent on several factors including how retailers choose to pass on their charges.
“The Aurora Energy of old did not spend as much as it should have on the network and prices were kept low as a result, an approach that was not sustainable. Our prices need to increase to fund essential investment, but we are committed to listening to our customers and seeking opportunities to refine our proposal where possible,” said Dr Fletcher.
“The $400 million three-year plan we are proposing reflects the prudent level of investment required to de-risk the network and position Dunedin, Central Otago and Queenstown Lakes for a future where the communities are heavily reliant on electricity.”
As previously signalled, Aurora Energy’s proposal will form part of its application to the industry regulator, the Commerce Commission, for a customised price-quality path (CPP), expected to take effect from 1 April 2021.
The final decisions on the scale of the plan and related pricing and reliability standards will be determined by the Commerce Commission, following customer feedback and further refinements by Aurora Energy. The Commerce Commission’s final decisions are expected in March 2021.
Aurora Energy General Manager Customer and Engagement Sian Sutton said the team were committed to ensuring people had the opportunity to comment on Aurora Energy’s proposal prior to the final report going to the Commerce Commission next year.
“For our consultation we have simplified these complex issues so that all members of the communities we service can relate this investment back to their lives. Our online consultation website has all the relevant information people need to understand our proposal to develop an informed opinion and easily make a submission,” Ms Sutton said.
Hard copies will be made available at the Aurora Energy offices, at local councils throughout the region. Drop in sessions are being held for those people preferring to speak face-to-face. Aurora Energy is encouraging customers to call 0800 22 00 05 for more information or visit the consultation website yoursay.auroraenergy.co.nz.
Customised price-quality path
The Commerce Commission can set a customised price-quality path to better suit the needs of a regulated electricity business and its consumers. In June 2020, Aurora Energy will apply for a customised price-quality path to take effect from 1 April 2021. As part of the regulatory process, Aurora Energy is committed to consulting with consumers before changing our prices and our proposed investment plan must be approved by the regulator.
Who is Aurora Energy?
Aurora Energy is New Zealand’s seventh largest electricity network by customer connections, supplying electricity to 90,000 homes, farms and businesses in Dunedin, Central Otago and Queenstown Lakes. Aurora Energy Limited is a wholly-owned subsidiary of Dunedin City Holdings Limited, owned by the Dunedin City Council. www.auroraenergy.co.nz