Trust plan alarms res­i­dents

Waikato News - - Front Page - Dee Wil­son

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.kcpow­

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.

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