Aurora Energy said it will change its regional pricing so the costs of providing electricity supply are allocated more fairly, but representatives from the region remain skeptical of the company’s announcement. 

The effect of the changes will be a “modest reduction in the share of operating costs paid by customers in Central Otago and Queenstown”, Aurora Energy regulatory and commercial general manager Alec Findlater said.

The reduction will be recovered from customers in the Dunedin pricing area.

“While all customers will face an increase in line charges in the first year of the CPP, as signalled in our consultation last year, the increase will be slightly lower than originally forecast for customers outside Dunedin,” he said.

See also: Aurora’s proposed power bill increases draw more scrutiny

The plans for the reallocation were outlined in the electricity network’s cross-submission to the Commerce Commission on its customised price-quality path (CPP) draft decision on Tuesday (January 19).

Aurora Energy customer and engagement general manager Sian Sutton said changes were being made following concerns raised by customers and stakeholders in Central Otago and Queenstown who felt regional pricing was unfair, and who questioned the basis for allocating different costs to different regions.

“We agree with our customers’ views that prices must be set fairly and based on efficient costs to deliver the services they use,” she said. “We listened to that feedback and are making changes in two stages as a result.”

But Aurora Energy could not provide the Wanaka App with any specific information about the upcoming price changes, which will come into effect in April.

“Our pricing from April 2021 is yet to be finalised and approved,” community relations advisor Amy Owen said. “When we publish the new pricing in March, we’ll be able to provide more detail and an explanation of prices for an average customer in Central Otago (including Wanaka).”

Queenstown Lakes mayor Jim Boult, who has been vocal in his opposition of the price hikes in the district, said Aurora Energy had not provided enough information to determine the announcement’s significance. 

Mayor Jim Boult says he still believes price increases in the region will be “significant”. PHOTO: Supplied

“We appreciate Aurora reviewing their regional pricing following the feedback from the community,” he said. “Obviously we welcome a downward movement in the prices for QLDC and Central Otago, but, other than referring to the changes as ‘modest’, Aurora have not provided any information of the magnitude of the reduction for our communities.”

Mayor for Central Otago Tim Cadogan also remained skeptical, saying he read the announcement as a “very small step” in the right direction. 

The pricing changes will come in two stages. Firstly, in its April 2021 pricing, Aurora Energy will use updated allocators for operational costs that “better reflect the maintenance and administrative costs of supplying each region,” Alec said.

The second more complicated area of change will take place from April 1, 2022 with Aurora Energy proposing to move away from its current allocation based on replacement cost (RC) and determine regional, asset-based cost allocation on the basis of new regional regulatory asset base (RAB) models. 

In a letter to the Commerce Commission, Alec said consultation on the company’s longer-term pricing roadmap and the issue of regional pricing would take place in September or October.

“The change should provide customers, stakeholders and regulators greater confidence on how costs are allocated, with an approach that better reflects the actual investment in each pricing area. We will consult widely on the rationale for the proposed change and how that would impact prices in each region.”

Jim said he did not expect the regional pricing changes to have much positive impact for the district’s ratepayers.

“We expect that the price increases are still significant. There is simply insufficient information to judge the potential impact of their proposed wider review of regional pricing later in the year.”

Read Aurora Energy’s cross-submission to the Commerce Commission here.