Business segment reports
Our cost estimate for the Auckland flooding and Cyclone Gabrielle includes around $7.4 million operational expenditure and $9.2 million capital expenditure. Increased network investment to adapt to the impacts of climate change is essential, not only to safeguard customer experience against increasing risk of weather- related disruption, but also because of the increased reliance on the electricity system for energy, transport and the digital economy. In our latest Asset Management Plan, we’ve included an initial $135 million as a preliminary assessment of the additional investment needed to boost climate change resilience following the impacts from the Auckland Anniversary flooding and Cyclone Gabrielle. Further work will be completed in the coming year so that our analysis can best reflect the very latest in ongoing climatic modelling for the Greater Auckland region. Vegetation management regulation remains key for resilience. Trees $ 422.6 M Gross regulated capex, an increase of 27.3% from last year
cause the majority of customer outages during extreme weather events, with a significant portion caused by trees which are outside the scope of the current regulations. We saw many clear examples of this earlier this year, including where landslides brought trees from the other side of the road corridor down onto power lines. The current regulations are a major constraint on our ability to manage this risk and we’ve been waiting eight years already for these to be reviewed. We’ve fed into the Cyclone Recovery Taskforce to share our learnings about the impacts of the Auckland floods and Cyclone Gabrielle on critical infrastructure, and we’re part of a working group established by the Electricity Networks Association to look into network resilience. Laying the foundations of smart demand management As consumers, we switch on and off our lights, heating and cooking without any thought to the impacts our individual actions have on overall demand. That’s as it should be, and smart demand management aims to find ways to reduce overall peak demand by spreading more evenly when things are switched on and off, and doing so in a way that doesn’t impact consumers or businesses. Smart demand management
reduces peak demand without effort from our customers, which reduces network costs and makes for a more affordable network. We’ve continued our work in this space with Auckland Transport, to achieve a more affordable electrification of public transport. In January, the city’s first fully electric bus charging depot was opened in Panmure (pictured above is Peter Ryan, Vector’s Chief Operating Officer for Electricity Gas and Fibre, at the opening event). Charging at this depot occurs within a ‘dynamic operating envelope’, where Vector forecasts optimal charging times each day and provides this to the depot, reducing peak demand for a more affordable charging solution. We’ve also published updated network connection standards that ensure consumers will be able to benefit from participation in future smart demand management solutions for residential EV chargers, and smart hot-water load control. With these new standards in place, we’re beginning to trial modern, household-level smart hot-water control that provides much more flexibility to target specific areas of network constraint at a much more granular level.
ZERO OFF-PEAK VOLUME LINES CHARGES From April this year we introduced a new pricing offer where, at all times of the day through summer and during off-peak periods over winter, our residential Time of Use standard user price categories have a zero price on volume charges, with only a fixed daily rate charged. This means, for the lines charges component of their power bill, residential customers could pay nothing for the volume of power they use, reflecting that during off-peak times there’s ample capacity available on our distribution network. We believe this zero off-peak price to be a first in the New Zealand market and will provide an opportunity for retailers to design innovative products for consumers, so that they can shift consumption and lower overall energy bills. Under the current Low-user Fixed Charge (LFC) regime, the mandated ceiling on the fixed-price component of lines charges means it’s not possible for us to make this offer available to all residential customers. However, the Government’s commitment to fully removing the LFC regime over the next four years means that new pricing structures to incentivise smart use of the electricity system will be able to be developed.
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