Wanaka power bills will rise, but not as much as they could have done: That’s the silver lining in the Commerce Commission’s draft decision on Aurora Energy’s proposed lines upgrade programme. 

The draft decision is a mixed bag for customers in Wanaka as well as the wider Otago region.

The electrical lines company has historically under-invested in its network, causing deterioration costing hundreds of millions of dollars to rectify. It has proposed a steep hike in households’ power bills to help pay the investment bill.

In its application to the commission the lines company sought average increases of $47.30 to Wanaka customers’ monthly power bills by 2023/2024. 

If that seems a higher figure than has been reported in the past, that’s because it is: Before being assessed, the commission had to adjust Aurora’s number to include relevant factors - like GST and inflation - which Aurora had neglected to include.

After taking that into account, the commission found there was still plenty of room to cut the fat: Expenditure cuts could reduce that bill by $15.80 per household per month, taking it down to an average of $31.50.

The commission proposes Aurora be allowed to recover a maximum spend of $523M over five years, close to $100M less than the $609M it requested.

Aurora Energy CEO Richard Fletcher inherited a tough job when he joined the company in January 2018. PHOTO: Supplied

The Wanaka figures, which also apply to Central Otago, are still significantly higher than the commission’s estimates for Dunedin and Queenstown households, which would pay an average of $22.20 and $22.70 by 2023/2024 respectively under the draft decision.

Incremental bill increases could start as soon as April 2021, with the commission estimating line charges alone could rise between $3-13 per month for the majority of households across Otago. This would increase to between $20 to $73 per month by 2026. 

“While our draft decision would lower Aurora’s expenditure and substantially reduce the increase in lines charges compared to its plan, we expect the impact on electricity bills would still be significant,” Commerce Commission associate commissioner John Crawford said. 

“To help mitigate the bill shock, we have proposed to smooth Aurora’s revenue over the five-year… period. This would limit Aurora to increasing the maximum revenue it can collect from its customers by no more than ten per cent a year.”

The commission acknowledged it has to strike a difficult balance between managing customer costs and funding the infrastructure upgrades needed.

“We understand the disappointment and anger Aurora’s customers hold about the position the business is in,” John said. “Aurora has, nevertheless, made its case for urgent and ongoing investment to replace old and failing assets in its network.”

Without the investment, John said, “the network will continue to deteriorate, safety incidents will increase, and its customers will experience more frequent, and longer, outages.”

Under the package of proposed decisions, Aurora would also have to set targets for power outages and interruption levels that reflect its actual performance over the past five years; and face requirements to improve its transparency on how it delivers against its plan and how it reports on its service quality and pricing calculations.

These were in part a response to customers’ lack of trust and confidence in Aurora delivering on its promises, the commission said.

An alternative scenario to the ten per cent each year scenario which the commission said could be considered is to cap overall revenue increases at five per cent in the first year and then ten per cent for each of the next four years, he said. 

Aurora Energy said it would make a comment after it had worked through the 500-plus page draft decision.

The commission will hold public meetings on the draft decision in Alexandra, Cromwell, Wanaka, Queenstown and Dunedin later this month. 

The Wanaka meeting will take place at the Lake Wanaka Centre on November 25, 10am-12pm.

Submissions on the draft decision can be made before December 10. Read the Commerce Commission’s summary of decisions here or its full draft decision here.