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Aurora Energy has unveiled a massive $720 million plan to upgrade its ageing infrastructure, but consumers will be taking a hit through larger power bills.
The Dunedin City Council, which owns Aurora, is also set to be stung, as significantly lower dividends were expected until power price increases kicked in from 2020.
Aurora's plan, the largest work programme in the company's history, is an increase of more than $300 million on its previous 10-year plan, which was released last year.
The company came under public pressure to invest more in its network, which covers Dunedin, Central Otago and the Queenstown Lakes area, after accusations it had failed to replace thousands of dangerously decayed poles.
Aurora Energy chairman Steve Thompson said the plan included replacing substations, lines and thousands of poles.
It would provide a major boost to the region's economy by creating new jobs and leading to spill-over benefits to other businesses, Mr Thompson said
But it would also mean more power interruptions for customers, to ensure worker safety, and larger power bills.
This was because Aurora planned to apply to the Commerce Commission for a price increase to cover the cost of the increased spending.
The price increase would start in 2020, but until then the extra spending on the network would not be matched by increased income.
This meant the company would have ''very ordinary'' financial results until 2020 and Dunedin ratepayers would take a hit through lower dividends to the council.
Mr Thompson said he was not in a position to say how much past failures were due to the situation, given he only joined the board midway through last year.
However, even if the company had spent more in the past upgrading its network, the cost would have still been passed on to customers through their power bills.
That was how lines companies in New Zealand were funded to maintain and renew their networks, Mr Thompson said.
For the consumer it was ''just a timing issue''.
''You either pay for it then or now.''
It was not yet known by how much power prices would increase.
A spokesman for the Commerce Commission said it would carry out an audit and verification and evaluation of the information Aurora supplied, before approving any price increase. The process for applying for a price increase also required consultation, which meant electricity consumers across Otago would have a chance to be heard.
''The question for the Commission and Otago electricity consumers to consider would be how to appropriately balance increased cost against investments that maintain or improve medium to long-term reliability of the Otago electricity system.''
Mr Thompson said Aurora's massive increase in spending over the previous 10-year plan was a result of two main factors.
Firstly, over the last year staff had worked hard to gain a better understanding of Aurora's infrastructure and learnt more needed to be done.
Secondly, Aurora had brought forward infrastructure spending, in part because of public pressure.
''What I think we had to do because of what I would call the unfair publicity around the state of the network was demonstrate to everyone that we are making significant strides towards upgrading the network.''
The company also had the second-oldest network in New Zealand and the state of its infrastructure needed to improve, he said.
''Many of Aurora Energy's network assets date back more than 50 years, so this programme will see ageing assets upgraded and replaced with modern equipment designed to keep pace with demand and ensure the resilience of the network.''