Energy Trusts of New Zealand
ETNZ is the national organisation for the 22 energy trusts, owners of companies that operate electricity distribution networks (lines businesses) on behalf of local consumers and communities. Member trusts have investments of over $7 billion in these lines companies, based on conservative regulatory valuations.
New Zealand electricity users elect ther trustees who oversee those investments, and are the beneficiaries of trusts’ profits.
[vc_cta bg_meta_type=”icon” bg_i_icon_apalodi_icon=”apalodi-icon-calendar-empty” h4_position=”below” h2=”The Spring Conference has now been reconvened to be held in Karapiro on Thursday and Friday 17/18 February 2022.
Autumn Conference 2021 will be held in Wellington on 6/7 May 2021.
ENERGY TRUSTS AND THEIR COMPANIES
The trusts that own most of the lines industry on behalf of consumers or communities are not involved in day-to-day management. However, like any group of shareholders, they have rights to appoint suitably qualified directors to the boards of the companies they own, to ensure those directors meet expectations and to approve major transactions.
A key governance requirement is an annual Statement of Corporate Intent negotiation between each trust and its electricity distribution company, where the trust will set its expectations for the year. This may be used to evaluate directors’ performance when company boards are reviewed.
While some of the trusts have deeds and responsibilities which are similar, trust structures are varied and may include community trusts, consumer trusts and in some cases shared company ownership arrangements.
All energy trusts must comply with the various legal requirements set out in the Trustee Act 1956 (likely to be replaced by a new Trusts Act now being developed). Other legislation such as the Energy Companies Act 1992 also creates specific reponsibilities for ETNZ members.
TRUSTS ARE FOCUSSED ON THEIR COMMUNITIES
Trusts are obliged to foster an environment that enables lines companies to operate as successful businesses. This poses challenges under the current heavy regulatory regime (which in some cases is focussed on outcomes for the wider electricity industry rather than outcomes for consumers). Trusts and ETNZ are advocates for liberalisation of those industry-focused controls when they discourage innovation and fail to promote sensible outcomes such as energy efficiency.
Profits made by electricity distributors are channeled through to communities through trust dividends and line charge discounts. In many cases trusts have a mandate from their communities to promote positive local outcomes, such as the uptake of energy efficiency.
Consumer and community ownership give ETNZ and our members a strong focus on consumer interests. While protecting the investments they are responsible for is a priority, trusts recognise that the best outcomes for the people and regions they serve must be kept in mind. This customer focus is recognised in legislation, which exempts many trust-owned companies from the strict price controls applied to electricity distribution.