Submission
Which option do you prefer?
Option Two – The alternative option – Keep Aurora Energy
Further comment
DCC chose, in the early 1990s, to sell off the generation part of Dunedin Electricity and retain the network part. The sell-off of the highly profitable energy trading part resulted in the Waipori Fund, which continues to provide revenue for DCC. Retention of the network assets was not expected to provide an income stream; but rather to ensure that the (ratepayer) owners were not subjected to excessive line charges under the new regime.
DCC deliberately chose to retain ownership of the network; not in order to generate income but to ensure that the ratepayer / consumers were not subjected to price-gouging by commercial owners. Others areas, such as Waitaki, adopted trust ownership for similar reasons.
Electricity networks are natural monopolies. Consumers have no choice as to which network carries their electricity. A network can only generate significant profit by overcharging; under-investing; or a combination of both. Under-investment results in a less-reliable network, prone to more frequent outages and increased costs of repairs. This is what happened when DCC demanded dividends from Aurora to fund the stadium. Before then; the Dunedin network was highly reliable. Now it isn’t. And it’s a similar story in Central Otago - the only fundamental difference being that consumers in Central Otago are not also Dunedin ratepayers.
Aurora Energy is structured as a company primarily to ensure financial accountability. It must not operate at a loss; but should not be expected to produce significant profits. Those now bleating about lack of dividends form Aurora are being wilfully ignorant of history. Any sell-off of the networks can only be to the considerable detriment of the electricity consumers in the respective areas.
This so-called consultation offers only two options, either retain ownership (the status quo) or sell the assets. A third option, of passing ownership of these networks to a trust, must also be considered.
Supporting information
No associated documents with this submission.
Submitter
Submission id number: 1039713
Submitter name:
Alec Knewstubb
Organisation