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Aurora Energy is going to spend more on a massive upgrade of its ageing infrastructure, a move which will bring both good opportunities for the Dunedin City Council and extra costs for ratepayers.
The council, which owns Aurora, will receive significantly lower dividends as the work is carried out, forcing it to either reduce its spending, or increase borrowing, to maintain its existing functions.
Ratepayers face the prospect of rising power prices from 2020 as Aurora seeks to cover the cost of increased spending.
Apparently, Aurora is to produce some fairly ordinary financial results in the next few years as it scrambles to complete its upgrade programme. Instead of providing so much cash in previous years, it might have been prudent to spend money on infrastructure in the past.
But there is no going back. It is time now to look to the future and the ever evolving rule of technology in the energy sector.
At first glance, there seems to be a no-win for ratepayers. However, there is much to be said for finally having elected councillors realising there is no pot of gold at the end of a transmission line.
For decades, the DCC accounts have been propped up by dividends from the electricity companies, in whatever name they have used over the years.
The electricity reforms brought in more than 20 years ago were not initially kind to Dunedin and Otago — but a lesser understanding of what should be done, against what actually was done, has led both Aurora and the council to this stage.
The total surprise of elected councillors being told Dunedin City Holdings — the entity which oversees council-owned companies — was reducing, or in fact not paying, a dividend should have been a lesson. But it was ignored.
Instead, the council companies were gouged for money as councillors paid for vanity projects instead of concentrating on the life and soul of a city — it’s people.
Aurora 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. The difficulty, as seen from outside, is the companies believe they operate at arm’s length from the council through the appointment of directors and reporting to DCHL. DCHL then briefs councillors who, despite being elected by ratepayers, have little or no say.
What has escaped generations of councillors and council-owned company directors is the companies are ratepayer-owned.
Now is the time for a rethink on what the future holds for companies like Aurora. With the development of energy technology, is it possible the $720 million being spent on ageing infrastructure is being misdirected?
We have one of the best universities in the world in this city, people with enormous brain power looking at these very issues. Solar power is being used more extensively in the world than ever before. Wind power is developing rapidly.
In 20 years, there is a real danger Dunedin ratepayers will be left with dinosaur technology because, once again, the city has looked backwards not forwards.
The council is going to have to do more with less and cannot keep running back to ratepayers for constant top-ups when wages are barely rising in the South.
Instead of investing in technology which could be outdated within 20 years, this is a time — with a new council, and company structures — to present some new opportunities to ratepayers unlikely wanting to pay more for their services through increased rates and electricity.
Otago has been a province of innovation and flair. Let us all embrace change and work for a future where energy changes do not always have to disadvantage consumers.