Aurora fails reliability for third year

Aurora Energy could be fined or face court action after breaching a limit on power interruptions for the third year running.

The Dunedin City Council-owned company said it took the breaches "seriously" and would probably ask the Commerce Commission to relax its reliability standards.

If the Commerce Commission agreed, Aurora would be only the second lines company to operate under relaxed standards under a system called a customised price-quality path.

The only other company to operate under such a system was Orion, after its infrastructure was damaged in the Christchurch earthquakes.

Meeting the standards is important because the Commerce Commission takes into account liability when setting limits on how much lines companies can earn.

Aurora confirmed it had breached standards over the average amount of time power has been cut per customer after its data was leaked to the Otago Daily Times.

It would not be drawn over whether a lack of investment had contributed to the breaches.

The data showed that in February power had been interrupted for an average of 85 minutes per customer in the 2016-17 year, when adjusted for extreme weather events, breaching its limit of just over 83 minutes.

The regulatory year finishes at the end of this month, meaning the figure will be higher once Aurora provides the information to the Commerce Commission.

A Commerce Commission spokesman said it was not aware of the reported breach as Aurora was not required to provide the information until June.

However, if Aurora had breached standards its response could range from warning letters to administrative settlements and court proceedings.

It could also penalise Aurora by cutting up to 1% of its revenue.In response to Aurora’s contention the standards were too strict, he said quality standards were based on "historic levels of reliability".

The standards were in place to provide incentives for lines companies to "avoid a material deterioration in network reliability". The Commerce Commission, which has previously warned Aurora over a breach in 2012, also confirmed Aurora did not meet quality standards in both the 2014-15 and 2015-16 years.

Delta network commercial general manager Alec Findlater, who plays a key role in managing the Aurora network, said the standards were breached largely because it was carrying out more work on the network which involved turning the power off.

Significant weather events and the Glenorchy fire had also resulted in power outages, Mr Findlater said.

He would not be drawn either way on whether deteriorating equipment and a lack of investment had affected the frequency and length of power outages.

"Certainly there is a need for renewals, I’m not going to argue whether it is before or behind time."

The amount of work planned, which included the accelerated pole replacement programme in which power was often cut, meant it would continue to struggle to meet the standards.

He said it was not an ideal situation that companies were punished for turning off power when carrying out work, which was done to keep workers safe.

"I don’t think we can get into a situation where safety regulations are completely at odds with economic regulations."

Given the situation Aurora was in, it was strongly considering applying for a customised price quality path, which would include standards that took into account the amount of work it planned on the network.

He also reinforced that Aurora was in the top third of New Zealand networks when it came to reliability, but accepted some networks were disadvantaged because they had a higher percentage of rural customers.

It had been "some time" since it had compared its performance against networks with a similar make-up.

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