Aurora court case: Otago people 'will pay the price'

Former Delta employee Richard Healey went public about deteriorated power poles in 2016. Photo:...
Former Delta employee Richard Healey went public about deteriorated power poles in 2016. Photo: Peter McIntosh
The whistleblower who first raised concerns about the failure of Aurora Energy to maintain its network says people across Otago will pay the price.

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''.

chris.morris@odt.co.nz

 

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Why was Aurora investing so little in maintenance in the first place? Was there money going from Aurora to prop up other DCC enterprises?

Yes Fitzroy.They are called subvention payments to meet the Stadium debt.

let us just look at one sentence from this report:

"Dunedin Mayor Dave Cull said Aurora had kept the council informed and the Commerce Commission decision was anticipated."

The interpretation that can most directly be placed upon this statement is that

1) Mr. Cull and his Council were made fully aware by Aurora that this network is in a perniciously neglected and non-compliant condition, and that this neglect had reached a point where even the Commerce Commission (A pretty lethargic creature) was going to be compelled to do something about it.

2) Mr. Cull and his Council knew that Commerce Commission legal action and associated fines was imminent, but chose to do nothing about this situation, other than 'anticipate' its legal consequences and their associated legal liability for ratepayers.

'Anticipated' is also an odd term - it usually is associated with pleasurable expectation.

IMHO Cull is by default the figure head of Dunedin being the Mayor whether we like him or not, (he makes my skin crawl). Being the figure head he is ultimately responsable and accountable for the wellbeing of Dunedin, its people. This IMO includes the safety of the people and visitors. Cull, the councillors and CEO of the DCC have failed big time and need to be held accountable, even if it was prior to him being Mayor he has a duty of care and responsibility to Dunedin to keep its people informed and upto date. He should have stood up and told Dunedin. Because he or nobody else on council wanted to break ranks and speak up they are as bad as those who covered it up. Cull you need to be removed from your position as you are unfit to hold such a privilliged the position

What happens if the company folds and goes into receivership? I still say Cull has a big part to play in this as Mayor and not overseeing the reporting process. Wonder when this was from when the power poles were not replaced.
"Cull said Aurora had kept the council informed and the Commerce Commission decision was anticipated"

Cull has let Dunedin Down big time

This is why local councils should not own companies. The issues might be historic but it is the present and future consumer/ratepayer who will foot the bill. It is the management of the company that was at fault and it is them who should pay any fine but it is the consumer and ratepayer who will get screwed!

This City started deteriorating the minute that stadium build commenced , potholes everywhere on the roads ,power poles in disrepair , grass verges not maintained in timely fashion , cycle Lane ballsups , and the new lanes are a mess, now they want to build some clam shells and a bridge to no where. I place the blame firmly at Culls feet, how does he keep getting elected.

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