In 1907, the NZR started to build Otira Tunnel in the Southern Alps to cross Arthur's Pass. As the tunnel had a length of 5.3 miles (8.5 km) and an incline of 1 in 33 (3 percent), it was unsuited for steam traction. So a contract was put out to build a power station, overhead lines and six locomotives that was won by English Electric. Five of these locomotives were delivered for regular service in 1923 which collected their power from the 1,500-Volt overhead lines, while the sixth one was a battery-electric locomotive for maintenance.

The five locomotives for overhead service were numbered E 2 to E 6. They were four-axle boxcab locomotives with a total of 680 hp and their nickname was “trams”. A distinctive feature were the ventilation grilles on the sides. After the E^C had been introduced in 1928, the E was renamed to E^O to designate that they were operated at Otira. Although they originally had two cabs, one cab was removed in 1940. From 1942, they were always used in a combination of three. Their service ended in 1968 when they were replaced by the class E^A. This class later also became E^O. From the original class, only No. 3 was preserved by the Canterbury Railway Society. It is in operating order again since 1977 and got its second cab back. Today it is running on the Ferrymead Railway, together with E^C 7.