Delta #EpicPowerFail 4 : Delta/Aurora, Drugs and Dividends

from-grand-theft-otto-series-homer-danny-luvisi-pinterest-com-1

Received from Christchurch Driver [CD]
Sun, 30 Oct 2016 at 9:09 p.m.

Readers, your correspondent has decided that the present Delta/Aurora situation has many similarities to a drug deal gone wrong.

Grady Cameron and Matt Ballard have a drug problem, and the drug concerned is dividends. They are being stood over by their directorial pimps, Stuart McLauchlan, Trevor Kempton, Ian Parton, David Frow and ex ORFU beat-up specialist Steve Thompson (who are also heavy users of the dividends concerned), to produce more, more, more, every year. Despite the intimidation from the pimps, and threats of financial violence (if you don’t meet the most important KPI being $9.5M of dividends, no salary increase for you !), they bought themselves some breathing space, for a year or two, but down at the street corner (where the poles are !), Messrs Cameron and Ballard stopped looking after the infrastructure that laid the golden eggs of revenue a long time ago and stiff-armed them instead. The result ? – the “network” concerned voted with their cross-arms and simply “fell away” ….but who are the pimps working for ? Who has the raging dividend habit ? Who is the junkie that like all junkies, will engage in lies, fraud, misrepresentation as grist to its mill to feed its dividend habit ? It is of course the atrophied and hollowed out financial wreck that is the Forsyth Barr Stadium, that has a 40-year $7.2M dividend drug habit that it needs and feeds on for survival. Who allows this habit to continue and feeds off it also ? Mayor Cull, the Pablo Escobar of Portobello Rd.

While on the subject of addictive behaviour, Vaughan Elder and Chris Morris will also soon have a drinking problem, because from Saturday every time they venture into a bar, they will be shouted a drink by all Dunedinites that live or walk by a rotten power pole (all of them). The Otago Daily Times (ODT) had a flood of coverage and it was excellent, including a precise summary of the recent dismal Delta and Aurora history. Book your flights to the national media awards now guys. Hopefully this is the virtuous circle in action – excellent coverage, more ODTs and advertising sold, more resources given to the story, more revelations, more ODTs sold. Your correspondent has been proven to be very wrong in his earlier #EpicPowerFail post. Far from being missing in action, after a late start they are all over the issue, and instead of making us sick they are making us proud. Go ODT !!

Today your correspondent was alarmed at the offhand comment made by Pablo Escobar’s DCHL sideman, Mr Crombie, when he said in response to being grilled by the ODT that “the financial effects of replacing thousands of poles could be managed by changes to the timing of Aurora’s planned capital programme”.

There are two very important questions that arise from this – 1) How much will the replacement of the poles cost, and 2) what items of Aurora’s capital programme can be deferred.

odt-30-10-16Dealing with 2) first, Mr Crombie must have been mainlining on dividends and as high as a kite when he said this. Either that or there was a forlorn attempt at some more quarter truths and a desperate hope that the long term Aurora Asset Management Plan 2016-2026 (AMP) might disappear from the Internet. Your correspondent, fortified with a LOT of Bells did some heavy lifting through the 185-page document and can report the following pearls from Aurora’s own AMP that show that Mr Crombie, like so many addicts, is delusional :

Firstly, in the space of one year from 2015 to 2016, the state of the network (without the recent revelations) was so knackered that even with the best attempts of Matt Ballard, the Delta ‘General Manager for Risk and Capability’, to minimise capex by various sleights of hand, including the famous algorithms outlined in #EpicPowerFail 3, the amount of capital spending required ballooned – in the space of a year – from $373M to $443M, an increase of $70M. (AMP, 7.1 Financial Forecasts). Incredibly, Mr Cameron and the Board indulged in misrepresentation by reporting to DCHL that the total 10-year capital spending increase was only $417M, not $443M, by the simple and dishonest expedient of comparing
two different 10-year periods. This piece of elementary financial alchemy clearly escaped Mr Crombie and the other DCHL directorial head nodders also.

Councillors, please remember that Mr Crombie is going to lecture you in a month or two that you Must Lend $13.2M as a second mortgage to a shell company, Infinity Yaldhurst, with no visible means of support, because There Is No Alternative. It is clear from the above he either cannot read an elementary spreadsheet, or considers an error of around $26M of ratepayer funds trifling and not worthy of comment or correction. Coincidentally, this is the amount of the Yaldhurst debt. Not coincidentally, Mr Crombie doesn’t think $13M of ratepayer funds written off at Yaldhurst is significant or comment-worthy either. Where do we find these people ? You have been warned, Councillors.

To justify this sudden $70M increase in spending, the asset management plan helpfully provided some explanations of the scope of the work, and why it was urgent, which is going to haunt Mr Crombie, hopefully all the way to resignation. On Page 160, Aurora explained that “half of the increase is associated with deferred zone substation expenditure for which there is no further opportunity for deferral”.

In the next five years (2020-2022), there is $29M allocated for rebuilding worn out substations in Dunedin (Andersons Bay, Neville St, Smith St, Willowbank) that cannot be deferred. The reason that the substations are not being rebuilt before 2020 is because the major 11kV / 3kV lines that serve the substations are in even worse shape than the very aged substations built in the 1950s and early 1960s. The cables are already failing and have to be replaced even before the substations. Page 156 of the AMP helpfully describes the problem, “These cables are very old … These cables are now at the end of their life as the bronze tapes [that act to retain the gas insulation] are corroded and failing.” Regarding the possibility of failure, the AMP is candid “….have had some gas leaks … Gas leaks are difficult to locate and expense to repair … requires the cable to be out of service for several days for repairs to be made”. In relation to another type of cable, PILC cable, the ever helpful AMP notes, “We have had a number of failures of the Kaikorai Valley cables” [due to the oil impregnated cables leaking, then drying out and failing].

If readers are in any doubt as to how much of a knife edge their power network is being run on, Page 62 (Asset Risks 4.5.3) will spill the Bells all over the sofa : “Perhaps the most significant risk of a catastrophic asset failure relates to our remaining 33kV gas filled cables.”

To conclude, readers, Mr Crombie is simply creating yet more mad hatter conditions at Delta/Aurora with the desperate and inaccurate statement, that tens of millions of unplanned expenditure (the actual cost will be the subject of the next post, out of time and tea tonight !) could be accommodated by simple funding re-arrangement. (Deck chairs on the Titanic, anyone ?). There are more distortions at Delta/Aurora than in a fairground hall of mirrors.

[ends]

Posted by Elizabeth Kerr

This post is offered in the public interest.

*Image: pinterest.com – Danny LuVisi | Grand Theft Otto series, Homer

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17 Comments

Filed under Aurora Energy, Business, DCC, DCHL, Delta, Democracy, Design, Dunedin, DVL, DVML, Economics, Events, Finance, Geography, Health, Infrastructure, Media, Name, New Zealand, OAG, Ombudsman, People, Perversion, Pet projects, Politics, Project management, Property, Public interest, Resource management, Travesty, What stadium

17 responses to “Delta #EpicPowerFail 4 : Delta/Aurora, Drugs and Dividends

  1. russandbev

    A frightening read. The various interconnections are going to result in a tower of cards scenario. And I say that this surely started with rugby and the blind support for the professional code.

    First, the demanded unearned dividend of well over $20m per year to the DCC to assist with the stadium build. The shameless spending by Delta on sponsorship, free running of the Carisbrook lights, hospitality suites etc etc and then the locked in subvention payments of over $7m per year to the stadium – all done to blur the amount of financial support to the stadium.

    A side note on this – in the weekend the whole subject of the Delta fiasco was a hot topic among a group of people I was with. None understood or appreciated that the stadium was actually losing millions a year. Most believed the spin and just plain BS put about by the stadium managers and the DCC that the place was breaking even or maybe producing a profit. When they were told of the various subvention payments, most were shocked. When they knew where those payments were coming from the reaction was almost disbelief.

    So while professional rugby and its needs were locked on to all the teats on the Delta/Aurora cash cow, the assets of the company were fast approaching no value having been stripped or raped. Gas filled HT cables (a repeat of the Auckland fiasco), substations, power poles – all requiring millions and millions of dollars of urgent spending.

    So what does the pathetic Board of Delta and DCHL do? Play at being big-time businessmen and get into shonky deals at Luggate and Jacks Point and then the biggest of all, Yaldhurst. But don’t believe for an instant that there are no connections between Crombie and Cull.

    There can only be a couple of alternatives here. Crombie and his board knew the detail of what was going on at Delta and covered it up in the hope that they would be gone before the brown stuff hit the fan, they were unable to read annual reports and financial statements, or they were all completely hoodwinked by Cameron and co. What is more likely? Bear in mind Delta has been slapped with a damp bus ticket by the Auditor General over the property nonsenses. Surely a competent board would have been looking very closely at the core business?

    The DCC continued to require subvention payments and as we know when two Councillors tried to raise the activities of Delta/DCHL at a DCC meeting they were slapped down. What does that tell you?

    Hard to see anything other than a huge ratepayer funded bail-out of Delta/Aurora. Cameron will be gone with a pay-out, but who will have the fortitude to have a total clean-out?

    • Hype O'Thermia

      “None understood or appreciated that the stadium was actually losing millions a year. Most believed the spin and just plain BS put about by the stadium managers and the DCC that the place was breaking even or maybe producing a profit.” russandbev, I too have “intelligent” friends who speak of the stadium as an _asset_ !!!

      Another thing, related to but extending beyond the stadium costs, capital and in perpetuity.

      Nobody other than fellow WhatIffers mentions the effect of debt – every year Dunedin Christmas-wraps a huge box of Dunedin money and sends it to Australian banks. What would Dunedin look like if we kept that money here and spent it wisely?

      Spent money that’s genuinely earned and owned, not shuffled from one account to another to disguise the fact it’s really additional debt, I mean.

  2. Calvin Oaten

    Oh Dear! This is what happens when you get Jim Harland to run things. Debt explosions on non returning items plus the Stadium, which not only doesn’t return, but requires around $15m to $20m pa to stay alive. Has been since opening and will continue as long as it is with present management. Too late for any real advantages for Delta/Aurora I’m afraid. 3% rates in this environment is another disaster. Rates should have been nearer to 15% to 20% plus no further capital expenditure. But what do we get? 3%, that’s what. And the ‘nutters’ think we can get by with that plus all the divvies from DCHL. The cycle-ways have burnt up a shilling or two and will get into higher gear when we substitute a parking building at Frederick St to compensate for the on street losses. The on street losses can be ignored of course, but what then. Well , the council would have been gone by last 8th of October. I am still of the mind that the city is in for some steep learning curves and the citizens will be a lot poorer.

  3. Elizabeth

    ODT 29.10.16 (page 30)

    odt-29-10-16-letter-to-editor-vandervis-p30-1

    • Elizabeth

      Sat, 5 Nov 2016 LETTER OF THE WEEK
      ODT: Dividends to DCC at core of poles issue
      This week’s winner is Stew Webster, of Halfway Bush, for his letter regarding the dividends paid by Delta to the DCC being at the core of the power poles issue.

      OPINION [The Letter]
      Cr Lee Vandervis (ODT letters, 29.10.16) succinctly summarises yet another scandalous situation arising from the dysfunctional DCC/Delta/Aurora nexus in the form of hundreds of dangerous power poles scattered in every suburb of the city. In my own suburb a check showed far more rotten and dangerous poles than were shown on the city map in the ODT recently.
      Following closely on from the South Dunedin stormwater infrastructure failure, this paints an ongoing picture of deliberate neglect by the DCC and its companies simply to preserve the so-called “dividends” to the DCC, at the cost of public safety and wellbeing. The fundamental problem is the huge debt racked up by DCC to pay for glamour projects, like the massively expensive Forsyth Barr Stadium.
      Read more

  4. Mike

    I see an article in the ODT today saying that Delta will be fast tracking $30m to replace 3000 poles by the end of the year.

    $10,000 each? does it really cost that?

    • russandbev

      Just days ago the cost of a pole replacement was quoted by Delta at $5k per pole. Now it’s doubled. How come? Does Grady get a bonus payment per pole?

      • Elizabeth

        The day Richard Healey first went public as whistleblower on TV3 The Story we were told by co-host Heather du Plessis-Allan that it costs $5000 to replace a pole. Soon after sources for What if? Dunedin were told that Aurora has to suffer Delta overcharging, such that each pole costs $10,000 to replace – and that there is a CONSIDERABLE OVERCHARGING going on by Delta in doing Aurora’s work.

        In the middle of this is the sweaty jaundiced Grady Cameron, chief executive to both companies, AND the dividend-drugged directors of both boards.

        Obviously, we need a forensic audit.

  5. Simon

    Next year Mike, not this year. So what do we do in between times ? Sing God defend Dunedin.

  6. Chris

    One and half hour power black out in Mosgiel tonight. Sign of things to come.

  7. Elizabeth

    I would rather believe the words of Karen Steel, the widow of linesman Richard Steel who lost his life in December 2010, over the SHONKY morally repugnant coverup announced today by DETESTABLECrombie, DESPICABLE Cull, and the drugged on Dividends company Directors…. throwing money round like freaking birds of a feather, missing more Dangerous Poles and Broken/Vulnerable electricity network facilities than they will ever admit to while they continue as troughers.

    I can think of a number of reasons to evidence why these men need to lose their positions with the ‘DCC Family’. The day will come.

    P U R E ● F A R C E
    or at least until Richard Healey says it is Not

    Aurora Energy confirmed it would fast-track the replacement of degrading poles, with high-priority poles to be replaced within 14 months.

    Mon, 31 Oct 2016 at 7:55 p.m.
    RNZ News: Power company to spend $30m on pole replacement
    Aurora Energy will spend $30 million on replacing rotten power poles, but a linesman’s widow says it is ‘unbelievable’ they are so far behind. The issue has been raised in recent weeks after former Delta Energy linesman Richard Healey said there were still thousands of rotting and unsafe power poles in Dunedin – a claim which is now being investigated. […] “The objective of the fast track programme is to replace all 1181 poles currently rated condition 0 by April 2017, and all 1729 poles currently rated condition 1 by December 2017.” The company agreed to spend an additional $26m on its replacement programme, on top of the $4.25m already budgeted for the job.

  8. Elizabeth

    Mon, 31 Oct 2016
    ODT: $30m fast-tracked to replace poles
    The objective is to replace all 1,181 poles currently rated condition zero by April 2017, and all 1,729 poles currently rated condition one by December 2017. Aurora Energy has approved a $30.25 million programme to replace close to 3000 power poles in Dunedin and Central Otago by the end of next year. […] In a press release, chief executive Grady Cameron said the board approved the plan to fast-track its pole replacement plan at a meeting today. […] ”A programme of this scale will require more resources and Aurora Energy will be engaging additional contractors to supplement existing capacity from its primary contractor, Delta.” Cont/

    Map: Dunedin’s dangerous poles
    Map: Queenstown/Central Otago poles

  9. Rob Hamlin

    I refer readers to this nauseating item.

    http://www.radionz.co.nz/national/programmes/morningreport/audio/201822013/hefty-pricetag-to-replace-dunedin's-rotting-power-poles

    It is clear that an ‘official’ story has now been concocted by those in the loop. Briefly this story is:

    1) The Dunedin/Otago power network is “aged but SAFE”.
    2) The current upgrades were planned all along under a ‘conservative risk based plan’.
    3) Healey’s actions did not contribute in any way to the current programme.
    4) You had already been saved by GC instead – Last September apparently.
    4) GC’s new super ‘plan’ will fix the problem.
    5) Now go away and leave us alone.

    It was duly transmitted, unedited, to the nation by GC in person this morning. Ably assisted by GE of Morning Report who pressed no tricky questions and did not offer any third party analysis. A summary of this ‘official’ story has been repeated in every subsequent news bulletin that I have heard on National Radio. Listen away, but do make sure that that you have a sick bucket handy!

    I have no idea what a ‘conservative risk based plan” on maintenance is, apart from that according to GC in this interview it gets you out of complying with the relevant safety rules – that are presumably there for a reason! Even GE couldn’t swallow this one right away, but did not adequately press the issue. Beyond that there was no further description of said plan type, which has apparently been directing the maintenance of the HT wires above your heads.

    I suspect that this ‘conservative risk based plan’ may be bastardisation of the otherwise worthy ISO 31000:2009 standard (Risk management – Principles and guidelines). A document relating to the application of this international standard to electricity in New Zealand can be found here:

    https://www.ea.govt.nz/dmsdocument/20081

    Having looked at it, I suspect that that the notorious ‘algorithm’ may also be an illegitimate child of this standard.

    My reading of this morning’s statement is that, apart from a short term rash of poles, the application of a ‘conservative neglect based plan’ to the wider system will now continue until either the system finally catastrophically blows, or multiple adults (or one child) are killed in a manner that is very directly attributable to that neglect – and I do mean directly. I mean, how bad does it have to get? Did anybody go to jail after Auckland’s outages? Has anybody gone to jail after the CTV fold-up?

    I presume that the Mayor and most of the Council will formally sign up to this ‘official’ story on our behalf in due course.

  10. photonz

    The Mayor and Delta CEO deny there is a problem. But they are spending $26m to fix a problem they say doesn’t exist.

    That makes them either liars or imbeciles – either or which makes their performance totally incompatible with their pay and position.

  11. Elizabeth

    Richard Healey and his colleagues need our strong public support.

    We hear Garth Galloway was calling round to the Delta offices daily since Story (TV3) exposed the dangerous pole problem. By now we know how extensive the vulnerability of our Drastically Neglected electricity network is, and the Huge Safety Risk posed for Delta staff, other utility company staff and contractors, and the general public.

    No false bravado, corrupt pronouncements, supercilious lies and whitewash shit from the chief executive, company boards and political lightweights is acceptable.

    Please ODT, unravel the bastards. We will do what we can at this end.

  12. Elizabeth

    PS.
    Already published is the fact that Mr Cameron earlier refused to meet Richard Healey to discuss his concerns.
    Then too, early on a couple of lawyers for Delta had entered the fray……. but hey, we’re guessing Constructive Dismissal is a bad look for Delta. As is escorting Mr Healey from the premises as a corporate goodbye.

    We love Mr Cameron’s subtlety and ah, decorum – including the night Story broke the news about Delta, when Mr Cameron was spotted with ‘friends’ in Dunedin’s main street, allegedly ‘loud-mouthed, goonish and unashamed’ while ‘under the influence’.

    The updated post at top of thread, records again Richard Healey’s initial comments at What if? Dunedin. He describes the treatment he got when he responsibly tried to alert the chief executive. Strangely, Mr Cameron did not want to know.

    Why on earth, when we pay young Mr Cameron in gold bars.

  13. russandbev

    No, it is abundantly clear that NO PROBLEM exists. if there was a problem, WHICH THERE ISN’T, then we had a plan to fix it. But there WASN’T a problem and the fact that we are now publicly ridiculing Richard Healey is all his fault. He didn’t do the right thing and talk to Grady who is a great guy and always available to chat. The other people at fault are the public who only have silly perceptions aided by an irresponsible media.

    Yeah right.

    These statements from Cameron, Crombie and Cull now put all 3 investigations into left field and with nowhere to go. They will not proceed unless there is coordinated and sustained public pressure.

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