Tiny charge an electrifying portent

Even the smallest, most insignificant blow can add insult to injury.

Ordinarily, one would barely acknowledge a 3% price rise. Ordinarily, one would simply accept an increase of about $1 a month. But not this time. This time, the tiniest move is hard to take.

It started innocently enough, a press release explaining the outcome of a dull-as-dishwater process in which the Commerce Commission confirmed its decision to reduce the revenue electricity lines companies can get from their networks.

The commission’s default price quality path decision had "struck a balance between keeping electricity costs low for consumers and ensuring adequate investment". Lines companies would charge less, but would make the most of cheaper borrowing to keep their networks up to scratch.

The commission’s final determination suggests monthly lines charges will drop for thousands of residential lines company customers across the country. OtagoNet customers may pay about $9 less, Electricity Invercargill customers about $3 less and Alpine Energy customers about $16 less.

All up, householders served by 14 of 15 New Zealand lines companies should see positive change in their April power bill. Householders all over the place, that is, except for those served by the seventh-largest electricity network in the country.

Aurora Energy — the ratepayer-owned company that delivers electricity to homes in Dunedin, Central Otago and the Queenstown Lakes — is the sole red-inked outlier. It is the only one whose maximum customer-based revenue is set to increase.

Granted, it is only a small change — loose change at about $1 — but it is almost certainly just the first and likely smallest increase Aurora customers will bear as they fund a $400million programme to counter years of chronic underinvestment.

Aurora is set to ask the commission to approve a customised price path, which will let it charge more than the industry norm to recoup the cost of playing catchup.

As reported last week, it is likely to need to charge 16% more in Dunedin and Queenstown, and 23% more in Central Otago and Wanaka. In Dunedin, the average monthly household lines charge will steadily increase to be $59 in 2024 and $101 in Central Otago.

This will happen as 14 lines companies switch to price increases that are roughly in line with inflation. That there is a regulatory expectation that they do so further demonstrates just how far Aurora strayed from the path its customer-owners and the commission expected of it.

Dunedin Mayor Aaron Hawkins was a councillor when the council-owned company was last year forced to acknowledge and plan to counter decades of underinvestment and neglect. Last week, he said the need for new cash was more sudden than expected, but lines charges would have increased whenever the work happened.

That is true, but the extent to which that cost would stretch its ratepaying owners was unclear until Aurora released details of its proposed three-year spending programme. The extent of the increases suggest charges that were historically not enough (and not well enough employed) are a thing of the past.

Now, customers who benefited from artificially low lines charges will have to help pay to fix the mess. Aurora has outlined the true consumer cost of starting to tackle the legacy of a lamentable past.

Its pitch to the commission will be released for public consultation early next year. There will be further discussion about what such significant increases will mean for those on low and fixed incomes, and on how it may further contribute to energy poverty in a region where dramatic climate extremes make affordable electricity central to quality of life.

Whatever happens, Aurora will need to ask its customers to help it fix what it allowed to become broken. The $1 price rise is merely the calm before the (electrical) storm.

 

Comments

Dunedin-ites have enjoyed cheap electricity for years. I would take the new Dunedin prices any time and cheer. How does 36c per Kwh, that I have to pay in Balclutha grab you? OtagoNet have overcharged us for years and the fact that they have to reduce their charges by $9 a month is testament to this. Can't wait to receive my $9 discount, but the cynic in me suspects that the power retailer will take advantage of this and increase its charges to take account of this.
Best way to give it to energy companies is to either reduce your usage or make your own.

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