Aurora forecast loss now $34m

Keith Cooper
Keith Cooper
The Dunedin City Council's companies have delivered another shock, as new forecasts project a $33.8 million loss by Aurora Energy over the next two years.

The result is set to flow into the books of the parent company, Dunedin City Holdings Ltd, which is now forecasting a $24.1 million loss over the next two years.

Across the council and its companies, debt was now forecast to climb towards the $1 billion mark - from $791.4 million next year to $926.5 million by 2022 - driven by increasing capital expenditure across the group.

The situation was revealed in the council-owned companies' statements of intent, which outline expectations for the next three years.

They were made public as councillors at yesterday's DCC meeting also signed off on the 2019-20 annual plan, including a 5.3% rates rise.

DCHL chairman Keith Cooper told yesterday's meeting the new figures were a significant change from draft statements of intent made public in February.

Since then, the council and its companies had gone through a ''robust'' process to revise the statements, including for Aurora, which continued to invest in network renewal, he said.

The new figures showed a deteriorating situation in the short term for the company and its parent, although both DCHL ($19.5 million) and Aurora ($11.9 million) expected profits to return in 2021-22.

In the meantime, a freeze on dividends to the council would continue, but the companies would still make interest payments totalling $5.9 million a year, his report said.

Cr Lee Vandervis questioned how reliable forecasts for 2021-22 could be at this stage.

Mr Cooper said it was not simple to answer, but, based on information available at present, ''these forecasts are robust''.

Earlier, council city services general manager Sandy Graham told the meeting the council's share of group debt - excluding its companies - remained within limits set by its own financial strategy.

The various spending changes driving the increasing debt — such as accelerating work on the Peninsula Connection project — had also been consulted on already, councillors heard.

Cr Vandervis was not convinced, telling the meeting the company SOIs were ‘‘one of the most worrying papers I think I have seen’’, and the council’s annual plan was ‘‘not sustainable’’.

The cost of Aurora’s network upgrade had increased over the years, despite assurances from the company, and in the real world, the company would have been sold off as a liability.

Instead, under council ownership, the figures were still ‘‘heading south’’ and would be a headache for a new council to inherit, he said.

‘‘I think it’s completely unacceptable that it’s got to this point.’’

Cr Mike Lord, the chairman of the council’s finance and council-controlled organisations committee, said he could not do anything to stop historic underinvestment dating back 20 years.

Instead, the focus should be on addressing the problem, which Aurora was now doing by investing in its network.

Cr Jim O’Malley, speaking earlier, also said the extra debt reflected accelerated asset management efforts, and would help provide a resilient city.

Cr Christine Garey said some people appeared to want infrastructure renewal without paying for it.

‘‘Well, guess what? We have got to pay for it. This is an investment in our city. It’s an investment in our people.’’

Comments

The continuing knock on effects of stadium costs for all to see. Bev Butler is owed an apology from this council.

Aurora serves more than just Dunedin.
Could well be a bite of empire building going on here.
If they don’t return to profit by 2021/22, the Dunedin rate payer will need to be relieved of carrying them.

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http://www.auroraenergy.co.nz/assets/Uploads/_resampled/ResizedImage6005...

Correct. Bleeding the Council companies white to pay for the Stadium.

Its a very short time since the current chairman of the Aurora board, Steve Thompson, was telling the readers of this newspaper that there was no problem with the Aurora asset, that it was simply a problem of public perception. How is this man, with what is a clearly demonstrated inability to understand the problem, still at the head of the fatally flawed attempt to fix it?

 

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