Aurora Energy chief executive Richard Fletcher and asset strategy and planning general manager Glenn Coates released the Asset Management Plan (AMP) yesterday.
Total network spend was now forecast at $748.4 million, $20.9 million more than forecast in the interim 2018 AMP which came out earlier this year. Expenditure on all network and non-network assets across the 10 years was expected to be $1,000,000,340.
Aurora Energy is owned by Dunedin City Holdings Ltd, on behalf of Dunedin City Council and supplies electricity to more than 90,000 homes, farms and businesses in Dunedin, Central Otago and Queenstown Lakes.
Dr Fletcher said there had been a "legacy period of underspend" in the power company’s assets and prices to consumers would need to increase. The AMP stated at October 4, the power company had a backlog of approximately 1027 red-tagged poles awaiting replacement.
The company has 55,000 poles, and 94,000 crossarms, and half of Aurora’s poles had not been tested since July 2012. The under-investment went back about two decades, and the company needed to "catch up with that backlog", Dr Fletcher said.
The company’s asset base was largely put in in the 1950s, ’60s and ’70s, so many assets were already due for replacement due to age. The under-investment was a "double whammy", Dr Fletcher said.
The Commerce Commission would have to assess and approve any changes in pricing, and there would be no change until 2020. Any price increase would also be subject to consultation with customers and other stakeholders.
In September, the Commerce Commission announced it was taking court action against Aurora Energy over breaches of quality standards.
Dunedin Mayor Dave Cull said yesterday the AMP appeared to be a "comprehensive strategy" to continue the improvements Aurora was making to the network.
"The level of investment planned will have a flow-on effect for consumers. However, in my view the safety and reliability of the network must be the top priority."
Two years after whistleblower Richard Healey raised concerns about the "neglected and decaying" network, the business had now separated its governance arrangements and created a new board.
In the AMP, Aurora planned to maintain its accelerated pole-replacement programme for up to three more years, increase conductor and crossarm renewals, renew the 33kV cable network and invest in serving growing communities in Arrowtown, Wanaka, Queenstown and Cromwell, as well as implementing new ICT systems and replacing poor-condition assets.
In the past 18 months, Aurora Energy had replaced or strengthened more than 5000 of the poles that most needed attention.
At a glance
Aurora Asset Management Plan 2018
• Total cost: $1billion over 10 years
• Half the pole network yet to be assessed
• 1027 red-tagged poles already identified yet to be fixed
• New price to be set in two years’ time
• 5000 poles strengthened/replaced in the last 18 months
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Comments
This begs the question, if Aurora was starved of investment for years to provide the council with funding for it's stadium deficit, and the long suffering ratepayers are now facing large electricity charge increases to fix the decaying network that resulted, can the claims of the Stadium management that they are now 'profitable' be taken at all seriously. A look at the big picture would indicate otherwise.
Should the headline not read Aurora plans to spend a billion-dollars of Dunedin Rate payers money?