If the extra capital expenditure is permitted, the result will flow into customer bills from 2026.
It would likely have a “relatively modest” impact on consumer bills in the Central Otago and Wānaka pricing area, and a lower impact in the Dunedin and Queenstown zones, the Commerce Commission said.
The commission last week released a draft decision that would permit Aurora to have an additional allowance on top of the previously agreed price path.
The pricing plan regulates how much revenue Aurora can retrieve from customers, capping increases.
Aurora had sought a $46.3 million adjustment for capital expenditure and the commission’s draft decision agreed to $44.6m.
This was for a series of “growth and security” projects collectively adding about $18.6m, as well as about $26m for what was described as consumer-connection capital expenditure.
Aurora Energy chief executive Richard Fletcher said the expenditure was to meet the higher-than-expected rate of consumer connections to the electricity network and increased consumer-driven electricity demand.
“The rate of new connections to the Aurora Energy network, in Central Otago/Wānaka and Queenstown, has been much higher than both the company and the Commerce Commission forecast when the company’s regulated annual expenditure allowances were set in 2021, post the Covid-19 peak,” Mr Fletcher said.
“The regulatory rules permit Aurora Energy to apply for a reopening of its five-year revenue path and an application was submitted to the Commerce Commission in December 2023.
“Our application has been subject to considerable scrutiny to ensure the expenditure is prudent and in the long-term interests of Aurora Energy’s consumers.”
Public consultation about the commission’s draft decision finishes on November 7.
Aurora’s application for reconsideration of its price-quality path provided more detail about the rationale.
The company submitted its five-year plan in June 2020 and the Covid-19 pandemic had a material impact on the proposal, the application’s executive summary said.
The proposal was based on a subdued forecast for electricity growth and the future was no more certain when the commission made its final decision in March 2021, the company said.
“Consequently, the commission’s final decision carried through our suppressed expectations, in terms of the final allowances for system growth and consumer connection [capital expenditure].”
Aurora identified a series of projects that needed to progress to allow for growth and to alleviate constraints.
Consumer connections had also exceeded expectations of the company and the commission.
The projects
— Riverbank Rd switching station conversion
Install a new transformer, switchgear and switchboard to reduce demand on the Wānaka zone substation.
— Upper Clutha auto-transformer
Install a new auto-transformer at Cromwell to enhance capacity and relieve a chronic security-of-supply constraint.
— Cardrona zone substation transformer upgrade
Replace a transformer to increase supply capacity to the Cardrona Valley to accommodate increasing electricity demand.
— Bendigo distribution reinforcement
Reinforce a Cromwell distribution feeder to increase supply capacity to enable connection of industrial load.
— Frankton substation transformer upgrade
Replace a Frankton transformer with a new unit to alleviate a persistent security-of-supply constraint.
— More customer connections
Allow more company revenue to recover increased consumer-connection capital expenditure.
grant.miller@odt.co.nz
