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The Commerce Commission yesterday confirmed it was initiating High Court proceedings against the Dunedin City Council-owned company for breaching regulated quality standards.
Aurora supplies electricity to nearly 90,000 customers across Dunedin and Central Otago.
The company reported breaches in 2016 and 2017, which a subsequent investigation by the commission had found were due to Aurora "failing to comply with good industry practice''.
"Specifically, the commission alleges Aurora under-invested in asset maintenance and renewal, which led to significant proportions of its assets - such as poles, cables and transformers - being in a deteriorated condition and at or near the end of their service lives.
"The commission considers that this led to an increased level of power outages and therefore significantly contributed to Aurora's breaches of the quality standards.''
A third breach for 2018 was also being investigated.
Each breach carried a maximum fine of $5 million.
Former Delta employee Richard Healey, who went public about deteriorated power poles in 2016, said yesterday customers would pay the price for the neglect.
He had argued for a portion of the company's income to be ring-fenced to pay for a commission-approved maintenance programme.
Instead, any fines would go to government coffers just as Aurora faced hundreds of millions of dollars in network upgrade costs over the next decade.
The company has already signalled it would seek a customised price path in mid-2020, to increase the distribution line charge component of customers' electricity bills, to help pay for the work.
Dunedin Mayor Dave Cull said Aurora had kept the council informed and the Commerce Commission decision was anticipated.
Dunedin City Holdings Ltd and Aurora had taken steps to maintain and upgrade the network, and improve reliability.
"I look forward to the findings of the independent review currently under way which will provide a comprehensive opinion on the state of the entire network in its current state,'' Mr Cull said.
Central Otago Mayor Tim Cadogan said it would not be "appropriate'' to comment as the issue headed to court.
Aurora chief executive Richard Fletcher, in a statement, acknowledged the decision by the commission but said the issues raised were "historic''.
"[The] decision by the Commerce Commission moves the process forwards to resolve what are now historic matters, in a way that Aurora Energy hopes achieves the best outcomes for consumers.''
Dr Fletcher said Aurora now had a "new team'' which was "focusing on the future and on making the necessary investment and improvements to maintain and upgrade Aurora Energy's electricity network''.
That included an independent review of the network and a new asset management plan (AMP), both of which would be finished next month and made public.
The documents would be "critically important'' to Aurora's stakeholders, the commission spokesman said.
An interim AMP, published earlier this year, forecast $930 million in spending over the next decade.
That was a dramatic increase on the $360 million estimated in 2015, and close to Mr Healey's prediction the bill would eventually top $1billion.
Concerns raised over Aurora's ageing network in late 2016 prompted the company to approve a $30.25 million programme to replace close to 3000 power poles.
That was despite then-chief executive Grady Cameron suggesting the network remained safe and the problem was one of "public confidence''.