Following an “overwhelming” public response, and in front of an overflowing sign-bearing public gallery which included former mayor Aaron Hawkins, Dunedin citycouncillors voted against the sale of Aurora Energy Limited 13/2 – to the applause of the gallery.
A total of 760 submissions were received through the consulting period, with 77% selecting the option to retain Aurora.
Mayor Jules Radich, as well as several councillors, voiced their discomfort at voting to retain the asset but said they were moved by the vocal public response.
Aurora Energy is an electricity distribution business serving Dunedin, Central Otago and the Queenstown Lakes region. Photo / 123RF
“I personally have offered some people the choice, keep Aurora and have higher rates rises or sell to have less debt, less rates and less risk. And most chose higher rates rises, which is a straight up honest answer, I think,” Radich said.
“At this point in time, Aurora is a cash-hungry beast. Yes, it is profitable, but it has high capital requirements ... It will be some time before it can pay a proper dividend, as we’ve heard 10 to 15 years. But it will.”
He said while there may be a “tightening of the belt”, he believed what the council was hearing was that the public would take that discomfort over the loss of Aurora.
Councillor Brent Weatherall said his vote to retain was made under sufferance.
“The people have spoken and I will support their view not to sell, simply because their vote is overwhelming ... Mark my words, there will be consequences,” he said.
Councillor Lee Vandervis, who voted against the motion, said he believed the council will have to revisit the sale proposal “within a few years, as it becomes obvious we can not afford the rates rises”.
“Aurora is a Rolls-Royce, high-cost, high-maintenance vehicle when the DCC can only afford to run a Toyota,” he said.
The Dunedin City Council. Photo / Ben Tomsett
Councillor Carmen Houlihan said retaining Aurora was a “no-brainer” and making a lot of profit despite “growing pains”.
Councillor Steve Walker said he had many reasons for his vote, but his primary two were that he did not want to be “London living the consequences of having sold off Thames Water to investors 35 years ago” or an Auckland City Council “selling down its family silver in the form of Auckland International Airport shares”.
Councillors Christine Garey, Sophie Barker and Mandy Mayhem agreed the public feedback had been loud and clear.
“The people have spoken, and Aurora belongs to them. To all of us, I say hold fast,” said Mayhem.
Councillor Bill Acklin said he supported the motion but urged caution.
“People think, great, we’ve retained Aurora, we’re going to be financially sound. For the next 10 years at least, it looks like we’re not. We’re going to be financially strapped,” he said.
Councillor Marie Laufiso said the decision was a test in values, and she rejected economic neoliberalism, including privatisation of assets.
Aurora, which is fully owned by Dunedin City Holdings Limited (DCHL) and in turn by the council, is an electricity distribution business serving Dunedin, Central Otago and the Queenstown Lakes region.
A council report said despite Aurora’s increasing value and profitability, it requires substantial capital investment in the coming years to renew aging infrastructure, expand to meet growing population demands and support decarbonisation initiatives.
This capital expenditure is expected to deplete operating cash flows and necessitate additional debt, which would limit the possibility of future dividends for the Council.
The forecasted debt for Aurora is projected to reach $581 million by mid-2025, the report said.
The proposal to sell Aurora was first introduced by DCHL in March 2024.
The recommendation suggested that selling the company would allow for the repayment of Aurora’s debt and establish a diversified investment fund.
The income from this fund could provide a more consistent and increased revenue stream for the council, which could have been used to offset rates or repay council debt, the report said.
The company’s annual report for the year ending June 30, 2023, shows it employed 157 people and had assets valued at $805m.
Capital expenditure increased to $99.3m, up from $83m the previous year, while net profit rose to $11.1m, compared with $7.8m the year before.
Ben Tomsett is a Multimedia Journalist for the New Zealand Herald, based in Dunedin.
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