Aurora’s price hike “commercial banditry” for Wānaka

Upper Clutha residents are going to bear the brunt of Aurora’s price hike (credit Crux)

Queenstown Lakes residents and in particularly Wānaka residents are being “absolutely dealt to” under the new pricing proposal by Aurora, according to Queenstown Lakes District Council [QLDC]  councillor Wanaka ward, Quentin Smith.  

Aurora Energy owns and operates the poles, lines and other equipment that distribute electricity from Transpower’s national grid to 90,000 homes, farms and businesses in Dunedin, Central Otago and Queenstown Lakes. Aurora is a wholly-owned subsidiary of Dunedin City Holdings Limited, owned by Dunedin City Council [DCC]. Aurora’s charges are built into power bills and are something its consumers are required to pay no matter which power company they are with. Typically, electricity distribution charges make up about a quarter of an average residential consumer’s power bill.

In June, Aurora was expected to apply to the Commerce Commission to spend around $400 million over the next three years to address safety and reliability issues on its network. To pay for this, the power bills of Aurora’s consumers were likely to increase significantly.

“The substantial increases proposed to electricity supply and network management sought by Aurora is the direct result of an ongoing failure to invest in and maintain the assets adequately and the skimming of undue dividends by DCC, money that needed to be reinvested in the company to fulfil their core function and responsibility to customers,” Smith said.

“The Upper Clutha faces nearly a 50 per cent greater increase and in some cases faces nearly double the line charges than what Dunedin residents are or will be required to pay or residents who have already benefited (through rates) from the undue takings from the company.”  

A letter from the Commerce Commission to Smith said: “In June, Aurora is expected to apply to us [Commerce Commission] to spend around $400 million over the next three years to address safety and reliability issues on its network. To pay for this, the power bills of Aurora’s consumers are likely to increase significantly.

 “Major investment is needed in Aurora’s network. Our [Commerce Commission’s] role is to decide how much money it should be allowed to recover from its customers to carry out its plan and over what period.

“We are acutely aware of the importance of this issue to Aurora’s consumers. We understand that now, more than ever, household incomes will be strained, especially in light of coronavirus. Many consumers will be struggling to pay their bills while needing a reliable electricity supply. A key consideration for us in setting Aurora’s new maximum revenues and quality standards is balancing the cost to consumers with the urgent need to fix Aurora’s network.”

Under investing in the Aurora network led to increased power cuts between 2016 and 2019. The High Court ordered an almost five million dollar fine for Aurora's failings under the Commerce Act.

Commerce Commission deputy chair Sue Begg said at the time; Aurora did not respond to an earlier warning in 2014 for not meeting its quality standards in 2012.

"Aurora's previous management and board were well aware of the deteriorating state of its network but failed to take action," she said.

"Aurora's historic under-investment in asset maintenance and renewal including of its poles, cables and transformers has resulted in a material deterioration in Aurora's service quality in recent years.

"In particular, Aurora failed to comply with good industry practice regarding their data management, asset renewal and replacement, risk management, and vegetation management."

Smith said; “The DCC and in turn residents of the DCC had been financially benefiting from taking funds from the company while it failed to maintain the network in the outlying districts. Most clearly seen in the power pole scandal but also evident in its underlying struggles in our region. The massive catchup in infrastructure cost is now being sought to be loaded on the smaller communities while giving the DCC residents a lesser increase. 

“Residents of the Upper Clutha should be outraged that we are wearing an undue cost burden to the benefit of the DCC. Both the DCC and Aurora continue to act with contempt for their customers who do not sit within the DCC district.   

“Prior to seeking any increases in the pricing, the DCC must return the undue takings from the company and reinvest them and then and only then should they see a balanced and fair increase in the costs. 

“Particularly in these times (post coronavirus) where few can afford a 24 per cent increase in power bills, and the actions of Aurora and DCC are grossly unreasonable and unfair,” Smith said. 

QLDC councillor Michael Laws said he would “also be asking our colleagues to take a stand on the usurious attempt by Aurora Energy to gouge Otago consumers to make up for appalling past management and governance.

“I will have some very strong words to share at [yesterday’s] council meeting on this issue. Aurora’s proposal is commercial banditry, plain and simple. The current Commerce Commission inquiry is seeking public comment, and the ORC has a direct interest. Very simply, these excessive price rises of up to 23 per cent, are bad for both the Otago consumer and the Otago environment.”

Read edition 976 of the Wānaka Sun here.

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