The Commerce Commission is seeking views on new revenue limits for Aurora Energy, the lines company responsible for supplying power to more than 200,000 people in Dunedin, Central Otago and Queenstown Lakes.
Aurora's current revenue limits expire in March next year, and the Commission's draft decision is to allow Aurora to recover up to $663.7 million over the four years from 2026-2030.
Commissioner Vhari McWha said the Commission has reviewed the company's future investment plans as part of setting new revenue limits for Aurora and is now seeking feedback before its final decision in November.
"We are conscious of the effect on electricity bills across Otago, and we've ensured this spend remains reasonable and limited to what's necessary to give consumers a safe and reliable network now and into the future," Commissioner Vhari McWha said.
"It means Aurora can continue to renew ageing assets on its network, while also meeting significant growth in demand for electricity in its regions," Ms McWha said.
The draft decision means household electricity bills in the regions Aurora services could increase by an average of around $10 per month (ex GST) in 2026, followed by average increases of about $3 per month (ex GST) each year after.
These estimates are averages across Aurora's three pricing regions, and actual increases will likely differ between consumers. To soften pricing impacts for households, revenue recovery has been smoothed across the four-year period.
As well as necessary network investment, the increase in Aurora's revenue limits is partly driven by increases in costs that electricity lines companies are all experiencing, including higher borrowing and material costs.
In its draft decision, the Commission has removed some expenditure from Aurora's forecasts.
"We want to see Aurora continue to look for alternatives to traditional infrastructure investment to meet demand across its network.
"That's why we have removed $16 million related to projects with potential to be deferred by alternative solutions like residential solar," Ms McWha said.
Enhanced reporting requirements
The Commission is also seeking feedback from consumers on the future of the enhanced reporting requirements that were set for Aurora alongside its current revenue limits in 2021.
In 2021, the Commission decided Aurora could earn higher revenue to address reliability and safety concerns on its network. The reporting requirements were introduced to give its customers across Otago confidence that Aurora was delivering the improvements they were paying for.
Reporting against these requirements has shown Aurora's recent investment in its network has had a positive impact, particularly in addressing historic safety concerns.
Looking towards 2030, Aurora is shifting its focus to improving network reliability, while also continuing to meet growth demands.
"The Commission wants to understand whether this additional reporting information has helped people track Aurora's performance, and whether similar enhanced transparency measures should continue," Ms McWha said.
Stakeholder feedback on the draft decisions is due by 5pm, August 22.
The Commission will publish its final decision by the end of November 2025.
Background
Aurora's current revenue limits expire in March next year and are a bespoke arrangement called a customised price-quality path (CPP). With the CPP period ending, Aurora's new revenue limits will be set under the general arrangements applying to other price-quality regulated lines companies, i.e. the default price-quality path (DPP).
Aurora's current CPP, approved in March 2021, was put in place to address safety and reliability concerns. It allowed Aurora to recover an increased amount of revenue from consumers over five years to repair and upgrade its network. It also saw Aurora subject to enhanced transparency and monitoring measures.
What is a customised price-quality path (CPP)?
The DPP uses relatively low-cost approaches for setting price or revenue limits and minimum standards for quality of service for a specified period; the current DPP is for 2025-2030. If a business believes the default path does not meet its needs, for example in terms of future investment requirements, it can apply for a CPP. A CPP is tailored to the company's specific plans and requires the Commission to complete a detailed assessment of its proposal before deciding on what its price path and quality standards should be.
Why was Aurora not part of DPP4 final decisions last year?
