Submission
Which option do you prefer?
Option Two – The alternative option – Keep Aurora Energy
Further comment
I oppose the sale of Aurora Energy by the Dunedin City Council.
The services provided by Aurora Energy are a monopoly and are essential for all citizens of Dunedin whose demand is highly inelastic. There is therefore no excuse for Aurora Energy to ever run at a loss.
The source of the investment of the Dunedin City Council in Aurora Energy comes from previous and current citizens of Dunedin who are effectively the shareholders of that investment.
Returns on investment can be increased by raising the price of the services and reducing costs by way of increased efficiency in management. But private ownership of a monopoly runs the risk of price gouging whereas Dunedin City Council ownership of Aurora Energy on behalf of the citizens of Dunedin does not.
Although the profits of Aurora Energy might not currently generate a return on the shareholder’s investment comparable to that attained in the private sector, the shareholders of that investment still benefit from enjoying the consumption of those services at a lower price than would be otherwise under private ownership. There is absolutely no need for the Dunedin City Council to sell its investment in Aurora Energy. Continued ownership of Aurora Energy by the Dunedin City Council is a win-win situation.
Ivan M. Johnstone PhD
Supporting information
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Submitter
Submission id number: 1045647
Submitter name:
Ivan Johnstone
Organisation