Powerco eyes price hikes to pay for $1.4 billion network upgrade
Powerco, the gas and electricity lines company owned by fund managers QIC and AMP Capital, wants to raise prices to help fund an upgrade to networks across the North Island that it says could cost as much as $1.4 billion.
The New Plymouth-based company will ask the Commerce Commission to raise weekly prices by $1-to-$1.50 per household, it said in a statement. Powerco distributes electricity to more than 320,000 houses and business across the North Island, implying a price hike if approved that would increase annual revenue by a range of $16.6 million to $25 million. The company's annual revenue was $457 million in the 2016 financial year.
The five-year upgrade would kick off in April next year, and Powerco outlined where $875 million of the proposed spending would go. It's seeking community feedback on the planned investment before lodging an application with the commission later this year.
Waikato and Coromandel stand to get the biggest investment, with $160 million flagged for regional growth and security projects and a further $90 million to replace ageing assets. That's followed by Taranaki, with a $40 million spend on growth and security and $130 million to replace overhead lines and poles.
Bay of Plenty would have $50 million invested in growth and security and $90 million spent on replacing old lines and poles. Manawatu and Tararua would have $60 spent on growth and security projects and $90 million upgrading assets. Whanganui, Rangitikei and Ruapehu would get $20 million invested in growth and security and $80 million spent on upgrades, while Wairarapa would have $5 million spent on growth and security projects and $60 million on replacing old lines and poles.
Powerco said there were pressing concerns about the volume of assets near the end of their lives in Whanganui and Taranaki.
The company is the second-largest electricity distributor in New Zealand, managing 30,000 kilometres of electricity lines and 6,170 kilometres of gas pipes in Taranaki, Wanganui, Rangitikei, Manawatu, Wairarapa, Waikato, Thames and Coromandel, and supplying 435,000 customers on its networks.
Powerco has $50 million of notes listed on the NZX debt market paying annual interest of 6.74 percent and maturing in September this year. The bonds last traded at a yield of 2.99 percent.