Shake-up agreed for Delta, Aurora

Fielding questions at a media conference yesterday following the release of the Deloitte report...
Fielding questions at a media conference yesterday following the release of the Deloitte report on Delta/Aurora network safety concerns are (from left) Dunedin Mayor Dave Cull, DCHL chairman Graham Crombie and newly-appointed Delta/Aurora chairman Steve Thompson. PHOTO: PETER MCINTOSH
Dunedin City Council-owned companies Delta and Aurora are in for a major shake-up.

The planned changes come as a result of recommendations included in a review by consultant Deloitte into Delta/Aurora network safety concerns, and in particular accusations Aurora dangerously mismanaged its electricity network and left thousands of poles to rot.

The shake-up would involve having separate boards and chief executives for the two companies and introduce a more proactive approach to maintaining the network.

After the review, commissioned by Dunedin City Holdings Ltd, was released yesterday, Mayor Dave Cull said the changes could have a significant financial impact on the council, resulting in rates increases.

It was also announced yesterday Aurora and Delta chairman Dr Ian Parton and fellow board member Stuart McLauchlan had stepped down.

However, newly-appointed chairman Steve Thompson said chief executive Grady Cameron would not be sacked as a result of the failings identified in the report, as he had confidence in his leadership.

"I think he's done a good job in difficult circumstances.''

He also would not accept the Dunedin and Central Otago network was unsafe, saying that having thousands of compromised poles was "sub-optimal''.

"I don't believe it's unsafe, but we just need to do more work on getting the infrastructure to a better level than it currently is.''

Aurora, DCHL and Mr Cull accepted the review's recommendations, which called for "significant changes'' to the way both Delta and Aurora were run.

It would follow the recommendations, which included splitting up Aurora and Delta by introducing separate boards and chief executives, with the review saying the current arrangement was "fraught'' with challenges.

They also accepted its findings which backed many of the concerns raised by whistleblower Richard Healey.

"There has been an under-investment in asset inspections/condition monitoring, planned maintenance and asset replacement over the last 25 to 30 years,'' the review said.

Mr Healey said he was satisfied for the most part with the report, but not with the response from Mr Cull, DCHL chairman Graham Crombie and Mr Thompson, who he said were all still trying to minimise the extent of the problem.

"It's very much like an alcoholic - the first step is admitting the extent of the problem.

"You are never going to fix it until you openly admit.''

Mr Thompson's claim the network was safe and his continued confidence in Mr Cameron were "mind-boggling'', Mr Healey said.

The review "nailed'' most of the key issues, but there were a few factual errors he was unhappy with, including the inclusion of new pole installations in the figures for pole replacements and an incorrect figure for non-operational equipment.

The Deloitte report did not include a detailed investigation of health and safety issues, but said risk had been increased by a lack of investment.

"It is inevitable that this increases the level of risk inherent in the network that could have implications for staff and/or members of the public,'' it said.

Aurora had been guilty of placing too much emphasis on providing dividends to the council and keeping debt levels under control as opposed to investing in the network.

Asset maintenance needed to give more attention to the long-term health of the network.

The report also found the board and management of Aurora needed to adopt a more transparent approach with staff and the public in relation to health and safety.

Mr Cull also refrained from saying the network was unsafe, instead saying: "I don't think it is as safe as it should be.''

He was pleased the review did more than just identify there was a problem and also provided solutions.

It was too early to say what financial impact the shake-up of Aurora and Delta would have on the council, but it could impact on rates.

"In the simplest form, if council took a lower dividend from DCHL obviously there would be implications for our rating.''

Mr Thompson said the board was "absolutely adamant'' Aurora would adopt the recommendations and would "speed up'' the maintenance of its network.

Despite maintaining the network was safe, he accepted it had not been maintained well enough.

"The board recognises we can do better, and my undertaking as chair is that we will.''

Mr Crombie said the boards of both DCHL and Aurora accepted the report's findings "in full'' and had already moved to address the issues raised.

It was committed to the separation of the governance teams of Aurora and Delta, Mr Crombie said.He would not comment on whether they would have been removed as board members had they not stepped down voluntarily.

"We talked about what was going on in the future; they looked at it and said what is best for the company and decided to step back from those roles.''

The problems identified in the report were not caused by DCHL putting too much pressure on Aurora for dividends, he said. He praised Mr Thompson's experience, which included working for Deloitte, as suited to the role of chairman and also announced DCHL director Brian Wood had been appointed to the board to assist the transition.

Findings 

•Underinvestment in network over past 25 to 30 years.
•Delta/Aurora board did not push hard enough for required maintenance.
•Board and management too focused on profit and debt levels.
•Board and management did not focus on the state of the network.
Lack of maintenance made increased health and safety risk inevitable.

Recommendations

•Aurora and Delta to have different boards.
•Each company to have its own chief executive (both have been run by Grady Cameron).
•Dunedin City Holdings Ltd to consider make-up of Delta/ Aurora board ‘‘with a view to improving diversity of thought’’. (Board chairman Dr Ian Parton and member Stuart McLauchlan to leave.)
•Delta to enter fixed-period service agreement to focus on core business.
•Aurora to develop 30-year plan for investment, maintenance, debt and shareholder returns.
•Board and management to adopt more transparent health and safety approach.

vaughan.elder@odt.co.nz

Comments

If just one word was could be used to describe the leadership shown over the poles fiasco, it would be "pathetic".

We have live wires falling onto roads and footpaths at regular intervals, yet our leaders from the CEO to the Chairman to the Mayor are so delusional they say there is no safety issue.

If there is no safety issue, then they are wasting $30 million in urgent spending and they should be sacked.

If they are lying about the safety issue, that is inexcusable and they should be sacked.

They can't have it both ways.

Another board wont help , just more exorbitant wages and another layer for pass the bucking. They all need to be brought back into the council with a councilor directly responsible for oversight and a direct line of responsibility to the ratepayers.

Right on photonz tell it like it is, the truth, Dave has proved again that he is soft by not sacking Grady Cameron, and the only "board members" that should be involved in this are the councillors who are elected by the ratepayers.

And now we're going to get TWO CEO's for the price of... well, two. Yay, another half a million on another suave bloke who can appease the public with soothing words, while eroding our infrastructure to pay for a stadium that most of us didn't want. Another superb day for the DCC.