Orion's $155m plan for network upgrade

Last updated 14:00 23/11/2012
Orion chief executive Rob Jamieson.
Orion chief executive Rob Jamieson.

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Canterbury householders are being asked to bankroll a massive post-earthquake electricity network upgrade needed to ensure the power stays on into the 2020s.

Orion New Zealand is planning a $155 million revamp of underground cables, overhead lines and substations that it says will make the system as, or more, robust and reliable than it was before the quakes.

It hopes to get approval by the end of next year from the Commerce Commission to lift prices to pay for the upgrade.

The public will be able to have their say on the proposal over the next month and again next year through the commission.

If it goes ahead, householders on the Orion network will see monthly power bills rise by about 5 per cent.

That's the equivalent of about an extra $8.50 a month on an average domestic bill of $180 a month, but does not include any increases due to inflation or those passed on from hikes in Transpower's national grid tariffs.

The cost of the upgrade is being spread out until 2023.

Orion's network was once the envy of New Zealand's other electricity lines companies.

For many years it ran the country's most reliable grid - the one with the least number of power outages.

While frequent snowstorms and gales in Christchurch and across central Canterbury failed to dent that reputation, the September 4, 2010, and February 22, 2011, earthquakes resulted in significant network damage.

The February quake caused more faults on Orion's underground network in a matter of seconds than normally seen over a decade.

As a result of damage and the subsequent 10 per cent lower demand for power, Orion has so far lost about $30m in revenue.

Chief executive Rob Jamieson said the $155m was needed to repair or develop almost every major part of the network, as well as expand it in fast-growing areas such as Rolleston, Lincoln and Belfast.

He estimated a seismic-strengthening programme carried out in the 15 years before the quake had reduced repair costs by about $65m.

"It also meant power was restored much quicker after the quakes. Without this work, power would likely have been out for months in some areas."

A resilient power network was essential for the city's rebuild, Jamieson said.

"It's not just an operational thing but it's about keeping the faith too. We are a key part of that confidence - how many hundreds of businesses would have relocated out of the city if the power had been cut off for months?"

Orion was "very aware" of the effects on the community of increasing prices.

"Unfortunately, people on lower incomes don't have the same options as some. After the quakes they didn't have holiday homes to go to. So the effects of power cuts were felt disproportionately by them.

"We are always looking at how to keep costs down, but there are costs involved in getting the network back to where it was before the quakes. It's our responsibility to keep the lights on and keep people safe in their houses," he said.

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If prices were not lifted to pay for the work, it would still need to be done. Orion might then have to pay a lower dividend to its majority shareholder, the Christchurch City Council, which in turn could lead to future higher rates hikes.


❏ Orion needs to spend $155 million to repair and upgrade its Christchurch and Selwyn networks before 2019.

❏ If approved, the work will add about $8.50 to an average monthly power bill of $180 through until 2023, about a 5 per cent increase.

❏ Its network charges now make up about 25 per cent of the average power bill.

❏ Orion estimates the earthquakes have cost it about $30 million in reduced revenue.

❏ Orion operates an 8000-square kilometre network across central Canterbury, running from Arthur's Pass to the coast between the Waimakariri and Rakaia rivers.

❏ It has 13,600km of lines and cables servicing more than 190,000 homes and businesses.

❏ It does not generate or sell electricity.

❏ Orion is 89.3 per cent owned by the Christchurch City Council. The remaining 10.7 per cent shareholding is held by the Selwyn District Council

- The Press


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