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19 January 2021
Following customer feedback, Aurora Energy is making changes to its regional pricing approach to ensure the costs of providing electricity supply are allocated fairly.
The plans were outlined in the electricity network’s cross-submission to the Commerce Commission on its customised price-quality path (CPP) draft decision yesterday, available here.
General Manager Customer and Engagement Sian Sutton said: “During consultation, we heard very clearly concerns from customers and stakeholders in Central Otago and Queenstown who felt regional pricing was unfair, and who questioned the basis for allocating different costs to different regions.
“We agree with our customers’ views that prices must be set fairly and based on efficient costs to deliver the services they use. We listened to that feedback and are making changes in two stages as a result.
General Manager Regulatory and Commercial Alec Findlater explains the planned improvements: “Firstly, our next price change on 1 April 2021 will use updated allocators for our operational costs that better reflect the maintenance and administrative costs of supplying each region. The effect will be a modest reduction in the share of operating costs paid by customers in Central Otago and Queenstown, with that reduction recovered from customers in the Dunedin pricing area. While all customers will face an increase in line charges in the first year of the CPP, as signalled in our consultation last year, the increase will be slightly lower than originally forecast for customers outside Dunedin.
“The second stage is our commitment to review our regional pricing model to ensure it remains fair and consistent, and to seek input from our customers and the community. As part of that pricing review, we’ll ask customers and stakeholders for their views on a new approach to allocating asset costs that would move away from the existing replacement cost basis to a regional split of the regulatory asset base.
“The change should provide customers, stakeholders and regulators greater confidence on how costs are allocated, with an approach that better reflects the actual investment in each pricing area. We will consult widely on the rationale for the proposed change and how that would impact prices in each region.
“Any change would only be made after detailed analysis of the regional cost allocations, and once the separated regulatory asset base has been independently audited. Any change to our pricing approach, following consultation, is expected to take effect from 1 April 2022,” said Mr Findlater.