MARLBOROUGH FLOODING

Between 28 and 30 december 2010 , a year’s worth of rain fell in Marlborough in two days, causing two parts of our network – on feeders totally unrelated to each other – to fail minutes apart. One fault was quickly isolated and restored. The other caused a longer outage. Soil already loosened by a previous storm had given way, sending an avalanche of topped pine logs down a hill near Havelock, demolishing power poles, taking out the lines supplying Havelock, Linkwater and the Marlborough Sounds and causing a logjam across State Highway 6.

Twenty of our staff tried to reach Havelock via the road from Picton but were progressively boxed in by slips and floodwater. Others, already in the area, climbed over the two metre high road block and hitched a ride to carry out switching to make the fault area safe for both themselves and roading contractors who had reached the scene. replacement poles and other repair equipment came in the long way via State Highway 63 through Nelson. Supply was restored after approximately 40 hours. Altogether we fixed 36 separate faults with an average loss of 206 minutes per customer.

CHRISTCHURCH EARTHQUAKES

In a six month period, the canterbury region (previously thought to be low risk) experienced two very substantial earthquake events. Both the September 2010 and the February 2011 quakes caused considerable building and infrastructure damage, with the second earthquake claiming 182 lives. Along with a number of other New Zealand companies, we provided manpower and machinery to assist with emergency generation, fault location and cable and infrastructure replacement.

Our staff were enthusiastic in responding to the damage caused to the Canterbury electricity networks of Mainpower and Orion and maintaining customer supply in circumstances which could easily occur in Marlborough, given the significant fault lines which run through the Wairau Valley and into Cook Strait. The consequences of the Canterbury earthquake prompted us to re-assess our own preparedness for an event of this kind in our region. In particular, the prevalence of liquefaction resulting from the earthquakes caused us to rethink the risks of underground cabling in some areas.

ECO SUBSTATION

Historically, electricity substations in urban areas have been something of an annoyance and an eyesore. Inherently, large power transformers emit a continuous ‘hum’ that can be irritating to those living in the vicinity. Additionally, the utilitarian look of traditional substations mar the presentation of residential streets. For a few years now, Marlborough Lines has been working to make our urban substations as sympathetic – both environmentally and aesthetically – as possible. We understand we are the only network company in New Zealand to construct all our urban substations to emit zero noise. Our recent Waters Substation project goes further – creating new standards across all aspects of substation design.

Transformers at the new substations are designed with radiators external to the building to allow the transformers to be housed indoors with no internal cooling or air conditioning required – making the substation energy efficient and noise free. Switchgear is installed inside the building and underground cables contribute to the overall appearance of a substation that looks like a contemporary neighbourhood residence. We also provide landscaping, with low maintenance gardens and lawns completing the residential look.

HORIZON INVESTMENT

As part of our growth strategy, during the past year, Marlborough Lines acquired a strategic 13.9% stake in Horizon Energy Distribution Ltd, a listed network owner that delivers electricity to the Bay of Plenty region – and one of only two listed regional network companies in New Zealand (the other being Vector).

Our move was motivated by the success of the Company’s two already existing ‘out of region’ investments (Nelson Electricity and OtagoNet) and our continuing desire to invest in, and partner with, other regional networks where we see potential to strengthen both parties.

We acquired our current shareholding in two stages: In June 2010 we authorised First NZ Capital to stand in the Market on our behalf to acquire the initial strategic stake of 10.1% shares. That offer was oversubscribed and so we subsequently opened again with another offer to increase to 15%. By the bid close off date in early August 2010, we had 13.9% of Horizon Energy shares, having purchased 3,472,059 shares at a cost of $14.274m.