Marlborough Express - Weekend Express
The issue with a consumer-owned power company
My time as a trustee of the Marlborough Electric Power Trust was at times frustrating, disappointing and satisfying – but above all challenging. Most new trustees feel this way.
Challenging because of the unique nature of consumer-owned energy companies.
Marlborough Lines Ltd is a product of the Energy Companies Act 1992, which disestablished electric power boards. The act provided the assets and undertaking of each board be to a new company, how the ownership of that company was to be decided and how it was to operate.
Marlborough consumers opted for a consumer-owned company with trustees holding shares on behalf of the consumer beneficiaries. Therein lay the ongoing challenge.
That act directed that the company operate as a successful business. The trustees had to support this as diligent shareholders under the Companies Act 1993. They had to balance this with their role as trustees and their responsibilities to their beneficiaries under Trust Law. To complicate matters, they also had to comply with a dozen pieces of Energy Legislation.
I came onto the trust in the wake of two significant events. The Electricity Industry Reform Act 1998 (the infamous Bradford reforms) forced energy companies to choose either generation/retail function or reticulation alone. The rationale of the author was giving something like 80% of generation in the country to the “Big Five” would create competition thus lower prices. Four of these were state-owned enterprises.
That didn’t work, did it? The distribution or lines companies were then classed as monopolies and subjected to rigorous regulation by the Commerce department.
The other event was litigation between the directors and trustees. Reading the judgement of Justice Doogue, it seemed the directors and management had not come to terms with the intent of the Energy Companies Act. This was an early example of attack on the trustees that is ongoing. The bulk of these are uninformed and much relates to what people think the trustees can do.
The trustees’ authority stems from the Trust Deed, then the Trusts Act 2019, then case law. Most of the very old principles of trust law were codified in this Act.
Sections 23-24 of this act impose mandatory duties on trustees; S23 know the terms of your trust, and S24 act in accordance with those terms. Our Trust Deed (available at mept.co.nz) prohibits trustees from taking part in management or taking a management position. Its power of investment is restricted. As shareholders, the trustees appoint and remove directors and approve the company’s Statement of Corporate intent. Understanding this would reduce much of the flak trustees get in spite of their work in interests of the beneficiaries.
Information about the change to electronic voting was widely published in local newspapers. Consumers who did not receive their electricity accounts by email were mailed hard copy. Howeve,r several people went to the registered office of the trust, which is a mere “post box” for the trust and were abusive to staff, alleging they’d been disenfranchised.
The new trustees issued a statement, ignoring the fact that by the very nature of trusteeship they had probably involved all trustees, reiterating that there was a poor turnout, and [earlier] that consumers only received $75. Every consumer with an installation connection point (ICP) received the company rebate, typically $200-$250 as well as the $75 dividend and had one vote per ICP. If you didn’t receive the rebate, talk to your providers.
The company has about 26,000 ICPs, 80% of them large industry or corporations. The Marlborough District Council, the airport company and the port company do not vote, to name but a few.
We should be proud of our company, and it is our company. It has one of the best reliability records of any distribution company in New Zealand that is not totally urban. It pays back to the community about $11 million via rebates and $1m in dividends a year, and about $500,000 in sponsorship and scholarships.