Company Information

The electricity network assets of Otago Power Limited were purchased in 2002 through a joint venture partnership comprising Electricity Invercargill 24.5%, The Power Company 24.5% and Marlborough Lines 51%.

The new electricity network asset company OtagoNet Joint Venture was formed and a Governing Committee was established.

At the same time the three joint venture parties purchased the electrical contracting company Otago Power Services Limited.

PowerNet was contracted to manage the electricity network assets on behalf of the owners and has offices in Invercargill and Balclutha.

Management of the network assets is implemented through a capital and maintenance works programme which constitutes the major part of the business plan. The business plan is approved by the OtagoNet Governing Committee.

The optimised deprival valuation of the OtagoNet network assets is almost $91.5 million. These assets consist of 4,350 kilometre of lines and cables and over 4,000 distribution transformers, with a capacity of just over 145 MVA.

PowerNet charges OtagoNet a network management fee. OtagoNet then adds maintenance costs, depreciation, overheads and a return on investment to the PowerNet charges. The total costs are on-charged to electricity retailers as wheeling fees or line charges.

Electricity lines businesses are measured by their financial and network performance. With 4,350 kilometre of line, OtagoNet has the lowest density of consumers in New Zealand at 3.3 consumers per kilometre of line and just over 14,500 consumers.

The 2002 Purchase Agreement provided for a deferral of any line charge increases for 3 years. One of the key issues facing OtagoNet, when taking ownership of the assets, was the need for significant investment in the network.

The OtagoNet Joint Venture has given priority to providing a reliable ongoing electricity supply to the consumers of the area. In order to ensure reliability of service into the future, significantly more money is being invested into the electricity network. For example during 2006 - 2008 expenditure on the network increased from around $4 million to nearly $9 million a year.