The Dunedin City Council's group of companies has returned a surplus, but directors say the group is in for a difficult time as it upgrades the city's electricity network.
Dunedin City Holdings Ltd's (DCHL) annual reports were presented to the council on Tuesday, where they received a muted response from councillors concerned about those issues.
Infrastructure company Delta and lines company Aurora have been heavily criticised for failing to maintain the network.
Aurora needs to spend $721million in the next 10 years, but DCHL chairman Graham Crombie said the group could cope with the resulting debt burden.
DCHL reported group borrowings already stood at $573million at the end of the financial year.
Mr Crombie said in the report the group had ''another successful year''.
But asked at the meeting if he was happy with the report, DCHL director Keith Cooper, who was standing in for Mr Crombie, said he was not happy ''by any stretch of the imagination'' with the results.
Mr Cooper said there had been some highlights in the group.
''But clearly there's been some big cost imposts, which is going to affect the performance of DCHL in the short to medium term.''
''Not happy, but it is a fair reflection of what's been going on in the last year.''
Mr Crombie said yesterday the position of Aurora, as it moved towards the $721million spend, put a ''damper on profitability'' until the next Commerce Commission reset period.
He said electricity revenue was set for a five-year period by the Commerce Commission.
When more cash was put into the network, profitability was reduced.
When that period was reset, in about three years, the income figure would change.
''At that stage you start generating profits again'', and more cash was available.
Because the company was about to invest ''a whole heap more'', there would be a flatter return.
Asked how the group would deal with the required spend, Mr Crombie said funding would be a mixture of debt and operating cash flows.
Suggestions by some debt would top $1billion ''doesn't make any sense at all''.
''It's just totally wrong.''
Asked if the group could deal with the debt, Mr Crombie said it could.
Aurora's debt increased from $170million in the 2015-16 financial year to $191million in the last financial year.
Mr Crombie said that was planned.
He said across the group, the companies were ''travelling pretty well''.
''We would be a lot happier if everyone was in positive mode.''
