Electricity price hike looking more likely in the south

Aurora Energy wants to invest $520 million in fixing its deteriorating networks. Photo / 123RF

It is looking more likely electricity prices will go up in Dunedin, Central Otago and Queenstown Lakes.

Aurora Energy wants to invest $520 million in fixing its deteriorating networks.

It had to seek permission from the Commerce Commission to recoup some of the cost by hiking power bills by an extra $20 to $30 a month for most of its 90,000 customers.

In its draft decision, the commission would allow Aurora to go ahead but says it has overestimated the money it needs to run its networks.

It said taking into account GST and inflation - lines charges alone could rise by between $3-$13 per month from April next year.

That would increase to between $20 to $73 per month by 2026.

The commission said its decision could change following submissions and public meetings.

A final decision is expected in March.

The package of proposed decisions released today includes:
• Sticking with the default five-year period, as it better reflects the long-term interests of consumers.
• Reducing Aurora's proposed capital spending on new assets by $41m (11 per cent), from $356m to $315m.
• Reducing Aurora's proposed operational spending to maintain and run its network by $45m (18 per cent), from $253m to $208m.
• Setting targets for power outages and interruptions on Aurora's network at levels that reflect its actual performance over the past five years.
• Requirements on Aurora to improve its transparency on how it delivers against its plan and how it reports on its service quality and pricing calculations.

"Aurora's historic underinvestment in its lines network has kept its lines charges comparatively low for its customers over many years. However, more recently this underinvestment has led to its performance deteriorating, with increasing safety events matched by worsening reliability issues," associate commissioner John Crawford said.

"We understand the disappointment and anger Aurora's customers hold about the position the business is in.

"Aurora has nevertheless made its case for urgent and ongoing investment to replace old and failing assets in its network. Without it, the network will continue to deteriorate, safety incidents will increase, and its customers will experience more frequent, and longer, outages.

"We consider Aurora's proposed capital spending to be generally well-founded. The difference in our assessment is mostly attributable to the timing of when this work is required due to the impacts of Covid-19. We do, however, consider Aurora has overestimated the amount of money it needs to run its network, which has led us to propose a substantial reduction of $45 million in its operating spending."

Crawford said while the draft decision would lower Aurora's expenditure and substantially reduce the increase in lines charges compared to its plan, they expect the impact on electricity bills would still be significant.