Orion has had another challenging year, with snowstorms and several major earthquakes continuing to test the resilience of the company's network.
In the review period starting April 1, 2011, Orion's catchment experienced strong earthquakes in June and December, as well as the heaviest snowstorms in more than a decade in July and August.
Despite the ongoing strains from the earlier quakes in September 2010 and February 2011, the network performed well during the latest period.
Power was restored to 99 per cent of customers within 24 hours of the magnitude 6.3 earthquake on June 13, and by nightfall after the magnitude 6 earthquake on December 23. Supplies remained on for 99 per cent of customers during the record-breaking snow storms in July and August. Even more impressively, no major safety incidents or accidents occurred during the response to these events.
Orion says that performance reflects the company's forward thinking and planning, which saw more than $40 million invested from the mid 1990s to strengthen and build resilience into the network, and an ongoing commitment to avoid or mitigate the fallout of high-impact, low probability events.
During the 1990s the company's engineers identified weak points in the network and emphasis was placed on strengthening assets with long repair times, securing equipment and upgrading substations to an acceptable seismic standard. All new structural assets and existing strategic structural assets have since either been designed or strengthened to withstand a 500-year seismic event.
Cable lessons
In addition, learning from other outage events around the country, such as the 1998 Auckland CBD power failure, saw the company carry out a multi-million dollar cable joint replacement project, introduce a security of supply standard, increase diversity of supply via a cross-city underground cable, and increase the capacity between substations. In 2011, Orion negotiated with Transpower to upgrade the Bromley grid exit point to reduce its dependence on the Islington supply point.
All of this risk protection work saved the company greater repair costs and weeks and possibly months of power cuts following the 2011 earthquakes. Orion estimates the $6 million spent on seismic strengthening avoided an estimated $60-65 million in direct asset replacement had the network not been in the shape it was. As it was, just four of the company's 314 substations sustained structural damage.
But the company continues to learn from each event and invest accordingly. In the past year it installed the third and final stage of its PowerOn network management system, improving its capacity to respond to network emergencies in real time. Last July Orion commissioned a mobile data centre, creating a backup system for its main computer room that can also be relocated in the event of a disaster.
And despite the higher costs and reduced revenue resulting from the Canterbury earthquakes, Orion's financial performance was solid in the period under review.
The company achieved profit after tax of $54 million - $26 million more than both the year before and the company's statement of intent target, thanks primarily to $21 million in insurance receipts as a result of earthquake damage to the company's administration buildings and $4 million in deferred operational expenses.
Fully imputed dividends of $34 million were paid to the company's owners - the Christchurch City and Selwyn District councils.
Network expenses increased by $7 million to $57 million - in line with budget. Around $20 million of these expenses were earthquake related.
And despite the damage from the initial Canterbury earthquakes, Orion says its reliability metrics are back below industry trend levels. While the 2011 data - the latest available - puts the company's average supply lost per customer at the top of the national scale at more than 800 minutes, Orion was the fifth-best performer in terms of the number of interruptions per customer per year.
The Lines Company of the Year Award category is sponsored by TE Connectivity.