Thursday, 12 November 2020

Mayor Boult “cautiously optimistic” about draft decision

Mayor to work with Councillors to understand the impact of Commerce Commission's document

Queenstown Lakes District Council (QLDC) Mayor Jim Boult will work with his fellow Councillors to understand the impact of today’s draft decision by Commerce Commission New Zealand (CCNZ) on Aurora’s proposed pricing increases for the region.

“I am cautiously optimistic that CCNZ is making the best of a bad situation on behalf of our communities,” said Mayor Boult.

“Pushing the programme from three to five years and reducing the proposed spend by $86 million is mitigating but ultimately households in our district will still be looking at adding something like $3-$13 per month to the power bill and this increases every year until by 2026 they will be paying $20-$73 per month. For many that prospect will be inconceivable”, he said.

The CCNZ has signalled that the reduction in programme is partly based on lower electricity demand due to COVID-19 which it considers will be a short term outcome. Although it has further signalled this position can be revisited based on growth, Council has some concerns about the network being capable of adapting to re-opening international borders for example.  The Commission also reduced the cost of Aurora’s proposal through expectations that Aurora must achieve some efficiencies in delivery as they embark on this sizeable programme of work. 

A couple of potential positives worth noting are that on the face of the draft there would appear to be a nod to QLDC concerns that Dunedin Holding Company Limited and its owner the Dunedin City Council (DCC) were not being held to account for years of underinvestment. The investment programme they have had to undertake on safety grounds was factored into the pricing model. The CCNZ is recommending $38 million of network investment already incurred by Aurora cannot be included in what they now recover from consumers, forcing DCHL, as owner, to fund it.  

Enhanced reporting on delivery of the programme and customer engagement is also welcomed as is push back around the allowed level of future unplanned outages (although not ideal sustaining the current levels of outages is better than the proposed increase over the next few years).

“Ultimately our community can think about how they use power and whether they can reduce their energy use (switching off, solar etc.) but we remain deeply concerned for those on fixed incomes contemplating using less or no heat during our winter period,” said Mayor Boult.

Council is keen to engage further with the community and Aurora around the potential for affordable solar initiatives to be introduced in parallel with price hikes. Inevitably Central Government will also need to pay some attention to this challenge as for some, reliance on social welfare to support utility costs will become more prevalent.

Council will want to spend some time understanding the draft decision and urge our district’s communities to engage at this point if they have not already as price increases will kick in from April next year.

Avenues that Council is keen to continue to pursue that sit outside the CCNZ remit include discussions with DCC around shareholder accountability and engagement with Aurora and the Electricity Authority on working towards cost parity across the region.

“The position we continue to find ourselves in is firmly wedged between a rock and a hard place. There is no easy solution. My hope is that our communities will get informed about this issue and start to plan for it. In fact, I strongly recommend they do so if they haven’t already. Cost may be further mitigated but ultimately power is poised to hit our communities in the pocket at a time when they can least afford it,” said Mayor Boult.

Submission on the draft decision can be made to CCNZ before 10 December 2020 and all the information relating to the draft decision and CCNZ scheduled community engagement over the next few weeks can be found at https://comcom.govt.nz/regulated-industries/electricity-lines/projects/our-assessment-of-aurora-energys-investment-plan

ENDS|KUA MUTU.

Media contact: communications@qldc.govt.nz or call 03 441 1802.