The Commerce Commission has received Aurora Energy’s (Aurora) application to increase its prices to fund a $383 million 3-year plan to address safety and reliability issues on its electricity lines network.

Aurora, which supplies electricity to 90,000 homes, farms and businesses in Dunedin, Central Otago and Queenstown Lakes, says its investment plan is to address historic under-investment in its network resulting in a gradual deterioration of its equipment. In recent years this has caused a higher number of safety incidents and an increasing number of unplanned power cuts.

To pay for this investment, Aurora is proposing significant price increases from April 2021. Aurora’s proposal estimates the 3-year increase in the total average residential power bill is between 10.6 and 16.7%, or an additional $20-30 a month*, depending on what region the customer is in.

“Undoubtedly, significant investment is needed in Aurora’s network. Our role over the coming months is to decide the maximum revenue it should be allowed to recover from its consumers to carry out its plan and over what period,” Associate Commissioner John Crawford said.

“We are acutely aware of the impact COVID-19 has had on consumers in Dunedin, Central Otago and Queenstown Lakes. As part of our assessment we will consider what options there are to manage price shocks, while ensuring Aurora’s investment plans are for the long-term benefit of their consumers.”

The Commission has also received a report by independent experts, farrierswier, whose role it was to review Aurora’s plan ahead of it being submitted. The report is designed to help the Commission focus its review on the key issues which warrant closer scrutiny.  

The Commission will formally consult over the coming months, including holding meetings in Dunedin, Central Otago and Queenstown Lakes after it publishes its issues paper in late July. A draft decision will be released before Christmas, with a final decision to be made in March 2021. Consumer price increases will take effect from 1 April 2021. 

In the meantime, the Commission welcomes feedback on Aurora’s final proposal from consumers and other stakeholders. This can be emailed to feedbackauroraplan@comcom.govt.nz

A copy of Aurora’s investment application, the expert’s report and background information on the project is available at www.comcom.govt.nz/aurora

Background

*Proposed pricing information sourced from Aurora’s customised price-quality path application, Appendix K paragraphs 815, 817 and 820.

About Aurora

Aurora Energy owns and operates the poles, lines and other equipment that distribute electricity from Transpower’s national grid to 90,000 homes, farms and businesses in Dunedin, Central Otago and Queenstown Lakes. Aurora is a wholly owned subsidiary of Dunedin City Holdings Limited, owned by Dunedin City Council. Aurora’s charges are built into power bills and are something its consumers are required to pay no matter which power company they are with.Typically, electricity distribution charges make up about a quarter of an average residential consumer’s power bill.

Regulation of Aurora

As Aurora is a monopoly and its consumers have no choice but to connect to its network, the Commission regulates the total amount of revenue it can earn from its consumers and the quality of service it must deliver. It does this by setting revenues and quality standards for local lines companies across New Zealand once every 5 years. However, if a lines company needs to invest substantially more in its network, it can submit an investment plan to the Commission seeking approval for increased revenues to recover this investment. The Commission does not regulate Aurora’s owners, set electricity prices, or get involved in the day-to-day management of the company.

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