Aurora Energy outlines large-scale asset renewal programme

24 May 2017

Media release

Aurora Energy outlines large-scale asset renewal programme

Aurora Energy is planning to spend more than $720 million in the Dunedin, Central Otago and Queenstown Lakes districts over the next decade.

The economic impact to the region will be extensive, with the creation of local and regional jobs and spill-over benefits to businesses. Accommodation providers will also be a major recipient as more staff and contractors are employed on infrastructure upgrades, maintenance and implementation of the Fast Track pole programme through the network.

Aurora Energy, which distributes electricity to more than 87,000 homes, farms and businesses in the Otago region, outlined its ten-year projections in its recently released 2017 Asset Management Plan (AMP).

The overall capital outlay incorporates the company’s recently announced Fast Track pole programme, which combined with normal renewal and maintenance, has already seen more than 1,000 poles replaced, repaired or reassessed to date. Longer term, the bulk of ten-year expenditure, $347 million, is allocated to asset renewal extending to a total of 14,000 poles, replacement of ageing subtransmission cables and an upgrade of overhead lines. Other major projects on the cards include a new substation at Carisbrook, which will replace the 60-year-old Neville Street substation by 2019 and a new Wanaka substation on Riverbank Road, Wanaka.

Aurora Energy Chairman Steve Thompson said an additional $81 million would be spent on growth and security of supply projects to support the region over the next ten years.

“Many of Aurora Energy’s network assets date back more than fifty years so this programme will see ageing assets upgraded and replaced with modern equipment designed to keep pace with demand and ensure the resilience of the network.”

Mr Thompson said the plan was focused on ensuring network safety and reliability as well as adequate funding to cater for long-term growth.

“Overall, the planning period will be characterised by the delivery of the largest work programme in Aurora Energy’s history,” he said.

The $720 million total planned expenditure over ten years is allocated to asset renewal ($347 million capital expenditure), maintenance ($192 million operating expenditure), growth and security of supply projects ($81 million capital expenditure) plus $101 million capital expenditure primarily on new consumer connections and safety and reliability.

Mr Thompson expressed his gratitude to electricity customers. “This increased work programme will come with increased outages to ensure worker safety. This will make it likely that Aurora Energy will continue to be above existing regulated reliability thresholds for a time, but we know the end result will be worth it.”

The company is also working to implement the recommendations of its shareholder in transitioning Aurora Energy into a stand-alone company. “This will provide dedicated resources and a clear focus on our major work streams in relation to the network renewal programme, supporting the achievement of long-term reliability targets.”

Key discussion points of the 2017 AMP include:

• Increased transparency in relation to network risks and controls to mitigate risk to employees and the public

• increased level of renewal expenditure to upgrade and replace ageing assets with modern, more resilient equipment

• Expenditure estimates to address high risk customer-owned service lines

• Increased shareholder engagement.

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