Vector struggling with $1.8b bill for Auckland expansion

  • 28/02/2016
Vector struggling with $1.8b bill for Auckland expansion

Auckland's main network company Vector says it is facing negative repercussions of the Super City's rapid expansion, and that it'll have to foot a $1.8 billion bill as a result.

It's the talking point of the moment; is it better for Auckland to expand outwards to the urban fringe, or intensify and build upwards?

Currently, it seems there is an argument for both options; but Vector, the company that would cover the cost of connecting new homes with gas or electricity over the next ten years, told Radio New Zealand it is in talks with the Commerce Commision about how best to pay the mammoth bill.

Vector has a monopoly on the market, and as a result is overseen by the commission to monitor its pricing.

But, its chief executive Simon Mackenzie told RNZ, these rules might need to be amended if the Auckland's growth is to be catered for properly.

"We do not want to invest in traditional network assets that in 15 or 20 years may no longer be needed at the capacity that is currently in place… And we don't want that cost to be a burden on consumers and we do not want it to be an issue that we are not earning a return on."

With other technologies such as solar power and batteries becoming more readily available, Vector says it is worried a reduction in electricity bills will hamper the amount available to pay for the electricity wires needed in the expansion.

While the wires will still be needed for electricity security, it might not be able to be funded and Mr Mackenzie says that could also see investors short-changed.

"The rapid technological change sweeping the energy distribution industry increases the risk that investments could be made redundant even before investors have recovered their capital."