Vector AR’19 ― Chair and Group Chief Executive report (continued)
Making work an ever-safer place Both the Board and management place the highest priority on ensuring that Vector has best-practice health and safety practices. Every one of our staff and contractors must be able to come to work each morning in the knowledge that they will be going home again safely at the end of their work day. We are delighted with the progress made towards our safety goals this year. We have significantly reduced both the occurrence of injury incidents and their severity, particularly in our contracting workforce. While this progress is clearly a company-wide effort, we acknowledge the award-winning initiatives of our OnGas Bottle Swap team at their new Papakura facility. the Future of Energy is here While the challenges facing our networks – relentless urban growth and electrification of transport – are not unique to Vector, they are intensified by the size of our region and the rate of change. Timely investment is critical, both in traditional energy network infrastructure and in new technologies which give our networks the intelligence to meet these challenges. Traditional network assets will continue to form the backbone of our network for the foreseeable future. However, the integration of new technologies and digital solutions into the broader system remains critical to efficient capital spend, and to provide the flexibility needed to better manage energy flows as demand grows and changes. We are continuing to prepare our electricity business for the unabated integration of EV chargers. In light of the Government’s recently Advancement towards an intelligent electricity network
The Electricity Pricing Review process has drawn attention to the critical importance and value of consumer data across the entire energy value chain. We support the broad consensus that unlocking access to smart meter data across the sector will bring customer service innovation, greater retail competition and more efficient network investment. We are optimistic that this will occur and that these opportunities can be realised for the benefit of consumers. Our commercial energy solutions business, Vector PowerSmart, has also had a successful year, enabling customers across New Zealand and the Pacific to adopt greater energy independence with solar and battery technology. As an example, our Technology report on page 31 showcases a partnership between Vector PowerSmart and the New Zealand and Niuean governments to install an integrated renewable energy solution for the people of Niue. We are excited by the substantial changes in both our Vector PowerSmart and Vector Communications technology businesses this year. We welcomed new leadership to both businesses and have embedded new plans to drive future growth. Of course, our most visible example of new, sustainable energy technology is Vector Lights on Auckland Harbour Bridge, which celebrated its first year anniversary in January 2019. Vector Lights is part of a 10-year partnership between Vector and Auckland Council, in collaboration with the NZ Transport Agency, and already holds growing cultural significance for the people of Auckland. Since its launch, Vector Lights has generated more energy than it has used.
announced clean vehicle ‘feebate’ scheme, it is almost certain New Zealand’s 15,000-strong EV fleet – more than 40% of which is on Auckland’s roads – will expand considerably. Our 2019 – 2029 Electricity Asset Management Plan outlines how we will ensure our network has the flexibility to respond to a surge in EV uptake. This includes a digitisation programme to enable better asset management and load optimisation, supported by innovative outage management services. This network platformwill provide a strong foundation to give consumers more choice and control over their energy needs. More information on our efforts to enable the convergence of transport and energy can be found on page 26. The importance of having smarter networks will only increase over time. To this end, we will continue to work with local and central government and regulators to highlight the real value of these platforms, in terms of decarbonisation, customer choice and affordability. Funding efficient investment The ability to invest at the right level at the right time is critical. Vector’s holistic strategy to fundamentally change its energy system requires significant, ongoing investment as it supports Auckland’s growth while investing in a step-change in technology to future-proof its physical assets. As previously mentioned, a key focus of our ongoing engagement with the Commerce Commission is how low interest and inflation rates are crystallising challenges within in the existing regulatory model. Since 2013, significant regulatory forecasting inaccuracies have resulted in around $270 million of lost revenue for Vector. We believe the case to align regulatory settings with the sector’s investment requirements has never been stronger, and we are not alone in calling for change. The Electricity Pricing Review
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