A report and extensive supplementary material adding up to more than 200 pages were posted on the council’s website last night, laying out the issues and exploring scenarios in considerable detail.
Council staff did not provide a recommendation to elected representatives about whether they should hit the sell button.
What they did suggest was deferral should be off the table.
Councillors are poised to make the decisive call next week.
Aurora distributes electricity to Dunedin, Central Otago, Wānaka and Queenstown.
Any sale price is tipped to comfortably exceed $1 billion. This would allow the council to set up a diversified fund worth hundreds of millions of dollars, providing an alternative revenue stream to rates.
Public opposition has been strong.
Expected growth in the value of the company is one factor.
Also, the potential for Aurora to return to providing cash dividends in the long term was among advantages listed for retaining the company.
"This is a challenging decision for council given the public sentiment that has to be considered alongside the financial challenges and economic conditions that the council has to navigate over the next few years," the report said.
The decision was difficult because it unavoidably involved uncertainty.
"One option sees council retain a profitable company that requires ongoing capital investment in at least the medium term, but is then likely to be in a position to provide council with a cash dividend.
"On the other hand, the independent advice from [Dunedin City Holdings Ltd] directors is that a premium price is likely if Aurora is sold now and the council would receive a higher income in the short to medium term through having a diversified investment fund."
Aurora is the largest trading company in the council’s DCHL group.
The council pitched a proposal to the public in March for a possible sale. It received more than 750 submissions and held a public hearing in May.
There have since been workshops run by DCHL and council staff, while public opposition to a sale has remained staunch.
The council report highlighted selling Aurora would make a big dent in the debt of the council and its companies.
Forecast group debt in 2034 is $2.4b if Aurora is retained.
It is $1.3b if Aurora is sold and potentially less if income from the diversified fund is applied to debt repayment and interest.
"A sale of Aurora would diversify council’s investments and therefore reduce risk," the report said.
Disadvantages included loss of an asset of potential strategic value. This was also brought up in the advantages listed for retaining the company.
"Aurora can be viewed as a strategic asset given the supply of electricity is an important enabler of economic and population growth.
"Keeping functional control of a lines company may enable council to determine the shape and scale of future urban development."
The report noted there were "national and international examples where asset sales have not produced the desired results".
It also highlighted "a risk that future councils may use the debt ‘head room’ created by a sale of Aurora to borrow more money".
However, the council is facing considerable challenges with debt and operational costs, which puts immediate pressure on its long-term planning if it does not sell Aurora.
"The level of debt may put pressure on future credit ratings, debt covenants and borrowing costs," the report said.
"At the recent Local Government New Zealand conference in Wellington, the government indicated that rates caps may be applied in certain yet-to-be-specified circumstances.
"If that was to happen, then this may constrain council’s ability to deliver some projects and services if council does not have alternative revenue streams."
If the council decides to sell, it will then determine a confidential reserve price.
If it keeps Aurora, this will affect an investment plan that is being worked on as part of the 2025-34 long-term plan.
The plan would need to be redrafted and the focus would be on "increasing the capital value of council’s investment assets rather than generating cash returns".
