More latitude for Aurora, Boult says

AURORA Energy needs to be given some freedom to sort out its problems, Queenstown Lakes Mayor Jim Boult says.

The Queenstown district council remains concerned about proposed price shocks, as well as underinvestment in the lines network.

The council has told the Commerce Commission it is alarmed by Aurora’s reaction to the draft decision on pricing, which said the amount Aurora could claw back from customers in the next five years would be $86 million less than the $609 million it had sought to fix safety and reliability problems.

Aurora says the draft decision would be so constraining it would seriously affect its ability to deliver and support its essential works programme.

In its latest submission, the QLDC said it ‘‘cannot and will not accept the risk that Aurora has outlined’’ and ‘‘we cannot place our community, our economy and our reputation at risk’’.

Asked if proposed price hikes were less worrying than Aurora being potentially hamstrung on the amount it could spend on its network, Mr Boult said both problems remained a concern.

He also wanted the Dunedin City Council, which owns Aurora through Dunedin City Holdings Ltd, to consider whether past dividend payments were reasonable.

The city council has been criticised for historically accepting dividends at the same time as Aurora was operating a rundown network.

Mr Boult suggested the DCC could help make up for that.

‘‘There needs to be money spent on the network. We don’t like the way it’s loaded towards Central Otago, Queenstown and Wanaka.’’

The Central Otago District Council has not added to its previous submissions.

However, in his submission on behalf of his council last month, Central Otago Mayor Tim Cadogan urged the commission to keep a vigilant eye on Aurora.

The commission’s role as watchdog was not to be ‘‘sitting in its kennel, but straining at the end of its leash’’, to make sure the company fulfilled its obligations, he said.

The increases in charges suggested in the draft decision remained ‘‘unacceptable to our community and we recognise and acknowledge the deep sense of hurt that our people and businesses feel about the current situation’’.

Mr Cadogan said the company was ultimately owned by the people of Dunedin. The Queenstown part of the network did not suffer from a monopoly, as there was a competitor in the area.

‘‘Only Central Otago stands exposed to the full threat of monopoly behaviour.’’

Among the recent submissions was one by Horowhenua and Kapiti company Electra.

It argued a 10% cap on total revenue growth would unfairly shift risk to Aurora.

The commission favoured a 10% cap as a way to smooth out price shocks.

The commission is due to make its final decision on Aurora’s application at the end of March.