ComCom to assess Aurora Energy’s proposed price rises

The Commerce Commission is preparing to assess Aurora Energy’s proposed $400 million investment plan and associated price increases.

Aurora supplies electricity to 90,000 homes, farms and businesses in Dunedin, Central Otago and Queenstown Lakes and is expected to apply to the commission in June to spend about $400 million over the next three years on its network to address safety and reliability issues, which will also aid EV charging.

Its plan will address historic under-investment in the network which has resulted in a gradual deterioration of equipment including lines, poles and transformers, leading to a higher number of safety incidents and unplanned power cuts.

Power bills from April 2021 are likely to increase significantly as Aurora seeks to recover the costs of the investment from its consumers, ComCom notes.

“Final proposed price increases will be known in June when Aurora submits its investment plan. “However, under its draft plan which it consulted on, Aurora estimated an average household’s monthly electricity bill would increase by 18%.”

ComCom says this equates to increases in residential line charges of up to $21 a month in year 1, followed by up to an additional $10 more a month in both years 2 and 3.

“It’s clear that significant investment is needed in Aurora’s network. It’s our role to scrutinise Aurora’s plan to decide the maximum revenue it should be allowed to recover from consumers to carry out its plan and over what period of time,” associate commissioner John Crawford says.

“We understand that now, more than ever, household incomes will be strained, especially in light of COVID-19. Many consumers will be struggling to pay their bills while needing a reliable electricity supply.

“A key consideration for us in our upcoming assessment is balancing the cost to consumers with the urgent need to fix the network.”

ComCom will consider consumer views for an issues paper due mid-2020 with a draft decision expected before Christmas and a final decision in March 2021.

Aurora is a wholly owned subsidiary of Dunedin City Holdings Limited, owned by the 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, ComCom says.

In March 2020, Aurora was penalised almost $5 million by the High Court for breaching its network quality standards between 2016 and 2019 in proceedings brought by the commission.

Visit www.comcom.govt.nz/aurora for more information.