Trust plan alarms residents
Most local people I talk to do not understand or know that if they pay a lines company account in the KCEPT area they are beneficiaries of the trust. Sandra Greenslade
A proposal that could see King Country Electric Power Trust (KCEPT) acquiring 100 per cent ownership of King Country Energy and setting up a standalone generation business is ringing alarm bells with watchdog group the Turangi Tongariro Residents Association.
The option is one of five being considered by the trust as part of a five-yearly ownership review process.
Residents’ association chairwoman Sandra Greenslade says the trust’s 12,000 beneficiaries in the King Country region— including just over 4500 people in the wider Turangi area— have less than a month until 3pm on March 17 to make written submissions on the options which are part of a 40-page ownership review paper.
She says very few people are aware of the review document and the public consultation process. She only learned of it a week ago after she was told information had been posted on the King Country Energy website.
The trust will hold a series of public meetings to inform people about options for the future, including management of a $40 million investment fund, before submissions to an ownership review document close on March 17.
Trust chairman Robert Carter says public notices were placed in newspapers in Turangi, Ohakune and Taumarunui in February. Libraries also have a hard copy.
He says the trust is very happy to talk to groups with concerns during the consultation period.
“There is no fait accompli. We have nothing to hide and will do our best to explain,” he says.
Options in the document include remaining with the status quo, winding up the trust and distributing shares to beneficiaries, selling all or some of the trust’s King Country Energy (KCE) shares to the public, selling some of the shares to institutional investors or the trust acquiring 100 per cent of a restructured KCE.
TrustPower currently has a 64.6 per cent shareholding in King Country Energy.
The King Country Energy Power Trust (KCEPT) owns a 20 per cent shareholding with the remaining 15 per cent of shares owned by other smaller investors.
Mrs Greenslade says the situation is extremely complex and people need time to have it explained to them.
“Most local people I talk to do not understand or know that if they pay a lines company account in the KCEPT area they are beneficiaries of the trust.”
Mrs Greenslade says the residents’ association has particular concerns with the 100 per cent ownership option.
The option would see TrustPower taking over the KCE retail business and the largest of its five hydro-electricity generation plants (Mangahao).
The trust would purchase TrustPower’s Hinemaiaia generation plant near Hatepe. A summary of the transaction option in the review document says the trust might need to divest its investment portfolio to fund the transaction.
Mrs Greenslade says the four small hydro-electricity generation plants the trust would keep are old, and with the Hinemaiaia station would only generate a total of around 21MW of electricity.
“It seems tome that they are looking at divesting themselves of the only power station worth keeping and sinking all of the investment assets plus somemore borrowed money into five small hydro electric power stations that should be under the care of the Historic Places Trust.
“The devil is in the detail,” she says.
The trust has an investment portfolio with a current value of $15.5 million returning around 6.8 per cent a year along with $4.4m in cash. Total trust funds were valued at $41.53m in the 2016 annual report.
Mrs Greenslade says last year around $1.3m was returned to beneficiaries in grants.
The residents’ group is lodging a submission opposing the 100 per cent ownership option in favour of sticking with the status quo.
It is also trying to make sure as many beneficiaries as possible know about the options and make written submissions. Mrs Greenslade met with mayor David Trawavas this week and district councillors. Turangi Tongariro Community Board members voted to support the association’s stand after a presentation from Mrs Greenslade at the monthly meeting on Tuesday.
Mr Carter says he is surprised the trust was not invited to attend the meeting.
Meanwhile, long-serving King Country Electric Power trustee and trust chairman for 14 years, Brian Gurney, has urged beneficiaries to take a serious interest in the review. In an open letter he said the energy industry was changing rapidly.
“A mis-step at this point in time could have very serious outcomes for the future of the trust and the $40 million in shares and cash held on behalf of the community/ beneficiaries.”
He said his observations on the five options were constrained by an absence of financial information but suggested the trust should pursue a further option of modifying its status from a ‘consumer’ to a ‘community’ trust. He said as a community trust KCEPT could sell its KCE shares and expand its investment portfolio at low cost— distributing income as cash or funding for community projects. He said the optionwould significantly reduce the “considerable investment risk posed by a KCE restructure” and suggested that an application be made to the High Court to amend the trust deed before the community trust optionwas discounted.
The ownership review consultation document can be viewed at www.kcpowertrust.co.nz.
COVERAGE: The 4582 King Country Electric Power Trust beneficiaries in the Turangi area are among just over 12,000 beneficiaries in the area covered by King Country Energy.
WATCHDOG: Turangi Tongariro Residents Association chairwoman Sandra Greenslade is urging people to make submissions to a King Country Electric Power Board Trust ownership review document.