Photo: RNZ / Nate McKinnon
The Dunedin City Council (DCC) will be consulting the public over a proposal to sell the council-owned lines company Aurora Energy.
The council said the sale would create an investment fund that could produce millions of dollars in proceeds each year, but it would not come in time to affect the projected rates rise of close to 18 percent for 2024-25.
Aurora Energy owns and operates the network that delivers power to over 200,000 homes and businesses in Dunedin, Central Otago, and Queenstown Lakes.
Councillors voted 13-1 to put the sale proposal to the public during the non-public part of a council meeting this week.
Mayor Jules Radich said selling the company would allow repayment of Aurora's forecast debt of about $570 million and create an investment fund for the remaining hundreds of millions of dollars.
"We could expect to see millions of dollars a year in proceeds from this fund. We already have a proven track record for this approach, through the Waipori Fund, which is on a much smaller scale than the new fund is likely to be."
Any fund would be protected and inflation-adjusted to protect its value over time, Radich said.
"When our Council announced the proposed 17.5 percent rates increase for 2024-25, I also said we were looking for alternative revenue streams to put our city on a more sustainable path," he said.
Radich said interest in purchasing Aurora was expected to be high.
Aurora's annual report from 2023 recorded total assets as being worth $805.3 million.
Radich said consumer rights would continue to be protected by the Commerce Commission and Electricity Authority under any new ownership.
"We know this announcement might be unsettling for staff at Aurora, but the company's operation will continue as normal and staff will be supported throughout this process," he said.
Aurora Energy is one of a group of companies owned by the DCC through its holding company, Dunedin City Holdings Limited.
The council said the majority of company debt across the group related to Aurora, and this was forecast to keep rising as the company continued to invest in the renewal of its network across Otago.
Aurora Energy has had a rocky history, and in 2020 was fined almost $5 million for excessive power cuts on the network stemming from its inadequate maintenance.
The Aurora sale proposal will go out for public feedback on 28 March and submissions will be considered at a hearing in May.