Reduced Aurora charges still pose affordability concerns

Even Aurora Energy’s lower price hikes due to take effect next month could hurt some Otago families, a University of Otago researcher says.

The Dunedin City Council-owned lines company announced its price increases for 2021 yesterday.

The increases align the company with a Commerce Commission draft decision on company revenue, Aurora said.

The increase in Central Otago and Wanaka would remain higher than Dunedin, but was lower than forecast, it said.

As Aurora begins price increases over the next five years to account for renewed spending on its infrastructure, from next month the portion of a power bill the company was responsible for on a given power bill would increase from 7.6% to 8.5% across the region, the company said.

University of Otago, Wellington, senior research fellow Kimberley O’Sullivan said it was clear that the infrastructure investment needed to happen, and that households needed reliable access to electricity.

However, any increase in energy prices would be difficult for some, Dr O’Sullivan said.

Almost half of Dunedin households (47%) could have difficulty affording energy for all their needs, including heating their home to a healthy temperature, she said.

In tourism-reliant parts of Otago where Covid-19 had hurt the local economy, some households could now be moving into energy hardship.

Those most at risk in Otago would be families with children, living in privately rented housing, she said.

Aurora chief executive Richard Fletcher said the company listened to the public and adjusted its cost-recovery pricing for this year.

It would reassess its programme for 2022, and public consultation on those price changes would occur later this year.

If power retailers passed on all of the price increases to consumers this year, for a standard residential household using on average 9000 kilowatt hours a year, the lines component of yearly power costs would rise by $59.28 for Dunedin customers (up by 7.6% on 2020), by $110.28 for Central Otago and Wanaka customers (up by 8.5%), and by $74.40 for Queenstown customers (up by 7.6%), from April 1, the company said.

But the final price for any customer would be determined by their power retailer, it said.

Higher prices in Central Otago and Wanaka were due to the higher cost per customer of supplying power to places with fewer people, but many infrastructure assets.

There were 56,000 customers connected in Dunedin on a network of 2375km, whereas there were 22,000 customers on the 2600km Central Otago network.

In Queenstown, 14,500 customers were spread over 971km, Aurora said.

It planned to spend $523million over five years, including an investment programme of $315.5million on a programme of power infrastructure upgrades, which began in 2017 with the replacement of poles, lines and building new substations.

About one-quarter of all power poles had been reinforced or replaced, and the majority had been inspected, the company said.

The work on poles, after years of underinvestment in the network, would continue, it said.

In 2020, Aurora spent $73.8million on maintenance and improvements, and this year planned to spend about the same.

New electricity infrastructure planned included a new Dunedin Harbour crossing cable and line and pole and substation upgrades in Central Otago and Wanaka.

In Arrowtown, Aurora would renew the ring network, a transmission system for Arrowtown, Coronet Peak and Dalefield, the company said.

Aurora applied to the Commerce Commission to increase household bills in Otago to fund a major network investment to upgrade its ageing network.

The overall revenue Aurora can bring in is decided by the commission.

The commission’s final decision is expected on March 31 and new prices to be in place the following day.

hamish.maclean@odt.co.nz