Prudent operator of power network

LETTER

In his letter on 7 February 2018 Rick Thorpe questioned why Eastland Network is planning $50 million of capital expenditure over the next five years. The answer is that, as a prudent operator, that is what we believe is necessary to keep the lights on for the region.

As detailed in our annual report, this expenditure will go towards ongoing capital maintenance and upgrading of the network. Essential projects include the replacement of aged or underperforming network assets such as poles, overhead conductors, transformers and high voltage switchgear.

We regularly consider how disruption (new technologies) might impact the network and our view is that this will have both positive and negative implications, but on balance the network will still be needed and have relevance.

People want electricity that is delivered as safely and reliably as is practicable. It is worth remembering that the Commerce Commission regulates the quality as well as price.

$10 million a year on capital expenditure is $392 per connection per annum. There are 29 lines companies in New Zealand and in 2017 their average capital expenditure was $403 per connection, so we are spending slightly less but about the industry norm.

Our regulatory revenue for 2017 was $39.9m and our operating surplus (EBITDA) was $18.6m (46.6 percent). The median regulatory revenue was $41.3m and the operating surplus was $20.7m (50.1 percent), so our margins are materially lower than the industry norm.

Matt Todd

Eastland Group chief executive

In his letter on 7 February 2018 Rick Thorpe questioned why Eastland Network is planning $50 million of capital expenditure over the next five years. The answer is that, as a prudent operator, that is what we believe is necessary to keep the lights on for the region.

As detailed in our annual report, this expenditure will go towards ongoing capital maintenance and upgrading of the network. Essential projects include the replacement of aged or underperforming network assets such as poles, overhead conductors, transformers and high voltage switchgear.

We regularly consider how disruption (new technologies) might impact the network and our view is that this will have both positive and negative implications, but on balance the network will still be needed and have relevance.

People want electricity that is delivered as safely and reliably as is practicable. It is worth remembering that the Commerce Commission regulates the quality as well as price.

$10 million a year on capital expenditure is $392 per connection per annum. There are 29 lines companies in New Zealand and in 2017 their average capital expenditure was $403 per connection, so we are spending slightly less but about the industry norm.

Our regulatory revenue for 2017 was $39.9m and our operating surplus (EBITDA) was $18.6m (46.6 percent). The median regulatory revenue was $41.3m and the operating surplus was $20.7m (50.1 percent), so our margins are materially lower than the industry norm.

Matt Todd

Eastland Group chief executive

Your email address will not be published. Comments will display after being approved by a staff member. Comments may be edited for clarity.

Poll

  • Voting please wait...
    Your vote has been cast. Reloading page...
    Are you happy with the level of enforcement of dog control regulations?