12 Capital commitments and operating leases Capital commitments At the balance date, contractual commitments for the construction of the Auckland office fit out were $514,000 (2015: nil). Operating leases A verbal commitment has been made to lease level 7, 41 Shortland Street, Auckland for an initial term of six years at an annual fee of $303,982.50 + OPEX + GST per annum. This provides a shared space for the Commission and the Energy Efficiency and Conservation Authority (EECA). The lease had not been signed at the 30 June 2016 balance date. The Commission also occupies office space in Wellington and Christchurch on a shared services arrangement with other Government agencies. 13 Contingencies Contingent liabilities If the Commission does not exercise the option to renew the lease of its Auckland office space then, upon expiry of the lease, it must make-good the premises. The make-good obligations require all chattels and leasehold improvements be removed and the premises reinstated. The Commission has assumed it will exercise the option to renew (2015: nil). Contingent assets The Commission has no contingent assets (2015: nil). Annual Report 2016 61