BUSINESS SEGMENT REVIEWS
REGULATED
NETWORKS
Regulated Network’s adjusted EBITDA for the six months to 31 December 2018 was up $6.0 2 million (3.1%) to $198.7 million against the prior half-year. This adjusted EBITDA uplift was largely driven by higher electricity volumes because of continued Auckland residential growth and a colder winter compared to the prior year, partially offset by higher maintenance costs. The increase in maintenance costs was largely due to additional expenditure focused on improving network reliability and reducing SAIDI. Revenue increased 2.6% to $403.1 million, driven by the release of accumulated Loss Rental Rebates 3 and an increase in capital contributions, which were up 21.9% to $41.2 million, this reflected continued connection growth and significant infrastructure development taking place across Auckland. Underlying revenue (net of contributions, Loss Rental Rebates and pass-throughs) was up $7.3 million with an increase in connections and a colder winter. This was partially offset by a decline in gas revenue of $2.0 million, primarily because of the regulatory gas price reset from 1 October 2017. New electricity connections fell 15.3% to 5,160 from 6,090, but remain elevated relative to historical levels. New gas connections increased 0.8% to 1,669 from 1,656. Total electricity connections stood at 567,009, up 1.3% from 559,777 the previous year. Total gas connections were 110,489, up 2.0% from 108,270 a year ago. Volumes transported across the electricity network rose 0.9% to 4,390 GWh from 4,352 GWh in the prior year. Average household consumption on our network appears to have stabilised after more than a decade of decline. Auckland gas distribution volumes were flat at 7.7 PJ. Regulated capital expenditure increased by 4.5% to $125.0 million, with most of the increase in capital expenditure due to Auckland growth and infrastructure development. Net of capital contributions, regulated capital expenditure
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HIGHER ELECTRICITY VOLUMES DRIVEN BY CONTINUED AUCKLAND RESIDENTIAL GROWTH AND A COLDER WINTER.
2. For the breakdown of NZ IFRS changes by segment see page 21. 3. This represents the accumulation for the six-month period ending 31 December 2018. These Transpower receipts have been released to Other income and a provision for payment is reflected in Other expenses. Proceedings relating to network outages brought against Vector by the Commerce Commission Vector is aware of media reports regarding the proceedings that have been brought against it by the Commerce Commission under the Commerce Act, for breaches of its quality standards. Some reports suggested Vector’s breaches were caused solely by its decision to change its health and safety practices to avoid work on ‘live lines’, and that the Commission had ignored this in deciding to bring proceedings. These reports are incorrect and the Commerce Commission has asked us to acknowledge that Vector would have breached its quality standard in the relevant years regardless of its changes to ‘live line’ practices. The Commerce Commission in December 2018 stated that its decision to pursue enforcement proceedings against Vector was not based on Vector’s policies for de-energising of lines for safety reasons. A penalty hearing in relation to these proceedings is scheduled for 6 March 2019. remained relatively flat. Notable projects completed during the period included two grid- scale batteries in Warkworth and Snells Beach, as well as additional generator purchases for supporting outage management. During the period, Vector reached a settlement with the Commerce Commission concerning breaches to the electricity network quality standards that occurred in 2015 and 2016.
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