Chamber of Commerce boss Anna Mickell says a “raft of complex legislation” is partly to blame for Queenstown’s clapped-out electricity infrastructure.
She’s “shocked” by the scale of power price hikes expected to result from a $55 million, three-year upgrade programme proposed by Aurora Energy for the resort.
But the alternative – a less resilient power supply in a fast-growing town – is not acceptable.
Mickell, who’s represented resort businesses on an Aurora advisory panel for the past four months, says power companies have to comply with complex laws aimed at protecting consumers, including against price shocks.
That legislation has contributed to “under-investment” in infrastructure.
The Commerce Commission limits the amount Aurora Energy can invest in its assets, and the amount of revenue it earns per year.
“A significant investment in assets by Aurora’s owners would’ve broken the legislated cost cap, and the company would have been penalised,” she says.
Aurora announced on Tuesday it’s proposing a $400 million, three-year programme to upgrade its rundown infrastructure in Dunedin, Queenstown, Central Otago and Wanaka.
It’ll pay for the work by drastically increasing line charges, which will inevitably prompt power retailers to hike their prices.
If Aurora gets the go-ahead from the commission, monthly lines charges in the resort will rise from $45 in 2021 to $79 in 2024.
It estimates the monthly power bill for the average Queenstown household will rise 16 per cent from $219 to $253.
The chamber chief’s take on Aurora’s proposal is at odds with the resort’s mayor.
Jim Boult says his council will likely make a submission to the Commerce Commission “strongly opposing” the increases.
He’s blaming the potential price hikes on Aurora paying “highly-inflated” dividends to its owner, Dunedin’s council, in recent years.
It should’ve spent that money on better maintenance and upgrades to its infrastructure, he says.
Boult even suggests Dunedin’s council should dip into its own pockets to alleviate the impact on consumers throughout the region.