Recent trends in revenue and demand
Horizon’s revenue from distribution line charges was flat over recent years. Revenue from line charges, which made up most of Horizon’s revenue, increased by around 1% from 2008 to 2011, over and above inflation. Distribution line charge revenue from residential and smaller commercial customers increased by 6%, and from medium-sized customers by 2%. Most of Electricity Invercargill’s revenue is from residential and smaller commercial customers.
Horizon’s flat revenue growth is mostly due a decline in demand from its largest five customers.
The average price varied across customer groups:
- The average price per small customer connection and per large customer connection increased each by around 4%, and stayed flat for medium-sized customers. The average price per unit of electricity delivered to small- and medium-sized customers increased around 5%.
- The average price paid by the largest five customers, as measured by revenue per connection decreased around 30%. The average price per unit of electricity delivered to the largest five customers declined by around 30%.
Demand growth on Horizon’s network has been slow since 2008. There were modest increases in the number of small-and medium-sized customer connections and electricity consumption. Large customer connections and electricity consumption grew around 8% and 7% respectively. The largest five customers decreased their consumption of electricity.
Recent trends in expenditure
Horizon’s total operating expenditure declined 2%, adjusted for the effects of inflation. The majority of operating costs were not directly related to the network.
Operating costs per customer were higher than the industry average. This may be attributable to the high proportion of large customers within Horizon’s operating area.
Capital expenditure increased modestly between 2008 and 2010 but grew 66% in 2011. This may be due to increased investment in reliability, safety, and environment.
Horizon’s capital expenditure forecasts vary significantly between forecast rounds. This may reflect changes in actual business need, the uncertainty of scheduling projects in future periods, and the opportunity to update forecasts in its Asset Management Plan annually. Horizon forecasts capital expenditure to rise by approximately 25% over the five years to 2016.
Recent trends in service reliability
The average duration of network interruptions was below both its regulatory limit and the industry average throughout the period. The average number of network interruptions was greater than its regulatory limit in every year since 2009.
Full analysis
The full analysis of Horizon's performance from 2008 to 2011 can be downloaded below.
All dollar figures in our analysis are adjusted for inflation and expressed in 2011 dollars.
