Delta, Aurora subject of three investigations

Richard Healey.
Richard Healey.
Three separate investigations have been launched into Aurora and Delta amid claims their failure to replace dangerous power poles could cost the Dunedin City Council tens of millions of dollars.

The magnitude of the accusations against the closely linked council-owned companies continued to grow yesterday.

Whistleblower Richard Healey said the cost of catching up with the backlog of thousands of dangerously compromised poles across Dunedin and Central Otago would probably mean the council would not receive a dividend from Aurora for up to 20 years.

This comes as Mayor Dave Cull announced yesterday Dunedin City Holdings Ltd (DCHL) was reviewing the claims against Delta and Aurora.

The Commerce Commission also said it was investigating Aurora for breaching limits on the duration and frequency of system outages or interruptions on its network in the 2015-16 financial year.

The extent to which ''equipment degradation'' contributed to Aurora failing to meet quality standards would be considered as part of the investigation, a commission spokesman said.

This follows the launch of a Worksafe investigation in recent weeks and comes as an internal document leaked to the Otago Daily Times yesterday showed Delta originally planned to replace 314 power poles this financial year.

The document showed a vast gap between the number of planned replacements and the 2910 poles Delta and Aurora chief executive Grady Cameron acknowledged last week were required under health and safety rules to be replaced in the next 12 months.

The document showed Delta originally planned to spend $2.96million installing 314 poles this financial year, which represented a decrease on the previous year.

In the previous year there was a budget of $3million to replace 321 poles.

The source of the leak said the actual figure in the previous financial year was higher as the company replaced about 130 extra poles, primarily because so many dangerous poles were discovered, in Dunedin at a cost of about $1.7million.

The source said staff had repeatedly been told the company would be sticking to the $2.96million budget this year and no extra funding would be granted.

The document also raised questions about Delta's plans to ramp up pole replacements and said an extra 4900 poles would probably come up for replacement in the next five years.

''It is reasonable to expect between 300-400 poles will be replaced every year utilising the existing line crew resources and applying current financial constraints.

''Given the rate of discovery and current backlog of poor-condition poles, it is not possible to smooth the bow wave associated with poles approaching end of life,'' the document said.

Based on Mr Cameron's figures and the average budget per pole replacement in the leaked document, it would cost Delta $27million to fix the 2910 poles it was legally required to in the next year.

Mr Healey believed the actual cost for replacing the poles it was legally required to would be between $14million and $20million.

He questioned how Aurora would source that level of funding, suggesting it would probably have to go to the council.

The number of poles that needed to be replaced in the next year was just the start, as more were coming to the end of their life.

Given other parts of the Aurora's infrastructure were also in bad condition, he doubted the council would receive a dividend from Aurora for between one and two decades if it ''actually addressed the problems''.

''Basically, they have raped the asset for 20 years and now someone is going to have to pay and it's going to be the ratepayers.''

An Aurora spokesman did not reply to specific questions relating to the anonymously leaked document, but said it was reviewing its pole replacement programme.

''Since the beginning of this month, we've been looking at a number of aspects of the programme and rechecking our approach.

''Following the concerns raised last week, the board asked us to review the replacement programme to see how it can be reprioritised to address the backlog of repairs and replacement.''

Funds had been earmarked for pole replacement and if necessary, the board supported additional funding.

Mr Cull raised the issue of Delta at yesterday's inaugural council meeting.

He had resolutions asking DCHL to conduct a review into the claims against Delta, but said they were unnecessary, as he had been told DCHL was already doing so.

He expected the report would be discussed at the next full meeting of the council, if required.

The next council meeting is in December, though Mr Cull said ''it remains to be seen whether the DCHL report overtakes that''.

Asked if he expected a request for tens of millions of dollars to help with the pole replacement, Mr Cull said he did not.

''I would have thought they [Aurora and Delta] would have done that within their capital programme.''

Mr Cull said such questions were ''surely the point'' of the DCHL review.

Asked if he had confidence in Mr Cameron, Mr Cull said it was not for him to have confidence or not.

Mr Cameron answered to his board, and the board answered to DCHL.

Mr Cull said the big question was whether the claims against Delta were valid.

''That's exactly what I want a review of.''

Delta and Aurora are intimately linked. Aurora, New Zealand's sixth-largest electricity distributor, contracts infrastructure company Delta to plan, manage, operate and maintain the network.

-Additional reporting by David Loughrey

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