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Aurora increases network spending plan by $42M

Tuesday 2nd April 2019

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Aurora Energy has increased its 10-year spending plans by more than $42 million following an independent review of the state of its networks.

The company, which distributes electricity in Dunedin, Queenstown and Central Otago, expects to spend close to $791 million on those assets through to 2029, up from the $748.8 million it signalled in October. The firm’s 2017 asset management plan had projected a 10-year spend of $719 million.

Aurora, owned by Dunedin City Council, restructured its business in 2017, established a new board and brought in new management after a review by Deloitte found the firm had been underspending on maintenance for decades. It is facing prosecution by the Commerce Commission for breaching its reliability standards in 2016 and 2017.

The company updated its plans to incorporate advice from consulting engineers WSP late last year.

Aurora says the “predominant” change from the asset management plan it published in October is an increase in spending to replace cross-arms on power poles. It will focus on cross-arms made from Malaysian hardwoods, which have proven less durable than those made from Australian timber.

Aurora says it will also increase spending on secondary systems – including protection relays – many of which WSP believed had become obsolete, had exceeded their expected life, or were performing poorly.

Aurora says the replacement of at-risk electromechanical relays at critical sites will be prioritised during the next three years. All will be replaced by 2025 and more spares will be carried to manage the risk of obsolescence.

Aurora is the country’s seventh-largest network, distributing electricity to more than 90,200 homes and business. It was previously managed as one business with council-owned contractor Delta Utility Services.

It was forced to bring in outside contractors in 2016 to try and accelerate its maintenance efforts amid growing public complaints about the number of collapsing power poles in the region. At the same time it was trying to keep pace with rapid development in Queenstown and Wanaka.

Hastings-based Unison Contracting has now established a permanent base in Dunedin as part of a five-year field services agreement it has to provide maintenance, renewal and development work for Aurora in the city. Last month, Aurora signed a similar agreement with Christchurch-based Connetics for work in Queenstown and Central Otago.

Aurora chief executive Richard Fletcher says the new agreements, effective this month, will ensure the company can efficiently carry out its major investment programme, while also introducing contestability to its field services.

In its report in October, WSP found that overhead lines, poles and cross-arms accounted for 58 percent of all the unplanned outages Aurora suffered due to deteriorated assets.

Most of the firm's assets posed little risk to public safety or the environment, and recent inspections and remediation efforts appeared to have steadied or slightly reduced the level of pole failure, WSP said.

That said, about 1,264 poles in Dunedin – 4 percent of that network – still had a ‘red’ risk rating, as did 104 poles in Central Otago – 0.4 percent of that network.

(BusinessDesk)



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