Time for change at the AECT

In 2009 I naively stood as an independent in the Auckland Energy Consumer Trust election. I thought the election would be about electing the best possible candidates to be Trustees.  I presumed there would be media coverage of the election issues, discussion of candidate policies and a fair chance of success if my skills and experience stacked up against what the other candidates had to offer.

Unfortunately (or fortunately- because if I had known I would never have bothered) I  had absolutely no idea that there was no chance that I would be elected because everything was stacked against me. I wrote about my experience here.

The incumbent C&R trustees had a very simple strategy:

  • pay the dividend of $320 just before election day
  • send out a letter to a database of 50,000 and put up hoardings claiming credit for the dividend payment

Then sit back and rely on no media coverage of the election and low voter turnout (less than 17% in 2009) to return them once again to a role that pays between $63,000 and $90,000 in fees. So of course they have taken exactly the same strategy for the 2012 election.

However things aren’t quite working out as planned – the dodgy practices of the AECT election are finally being exposed. Matt McCarten summed it up today here in the Herald on Sunday.

I’m supporting the YOUR POWER TEAM candidates. They have a range of well thought through policies that includes paying the dividend. They will bring long overdue fresh thinking to the role of trustees.

I want to see change at the AECT. I don’t think it is healthy for democracy for the incumbents to go unchallenged any longer.

Voter apathy and media blackout gifts Citizens & Ratepayers the AECT

In the end it was far too easy for the status quo to prevail. Citizens & Ratepayers simply targeted 25,000 plus supporters with a personal letter asking for a vote for all 5 candidates on their ticket. The rank and file fell into line and complied to ensure all five Trustees are now from one political party. The lack of media interest in the election and the incredibly low turnout (less that 17%) meant that it was an impossible task for an independent, or even the other tickets, to get anywhere close.  The AECT media release announcing the election result can be read here.

The AECT website optimistically states that “Your five trustees all come from different backgrounds and each one brings a different perspective to the decisions the Trust makes.” Unfortunately the election results means that only a small number of the Trust’s 300,000 beneficiaries, who are spread across the diverse communities of Auckland, Manukau and Papakura, can claim to be represented by the elected Trustees.

It is hugely disappointing election process and outcome that leaves the unsustainable direction of the Vector unchallenged for another three years. It also allows Vector to continue on a reckless “business as usual” path without adequately responding to the current environmental challenges or tackling an unhealthy corporate culture which is leading the company to inevitable crisis.

It will be interesting to see what the media and electricity consumers make in future of power cuts, under investment in energy infrastructure, rising energy bills, excessive Trustee fees, unsustainable dividend payments, a lack of community engagement by the Trust or any of the range of issues facing Vector and the AECT.

The AECT election has exposed how voter apathy, a paucity of information and well placed resources can distort the democratic process.  There are many lessons to be learnt as we fast approach the first super city elections if we want fresh thinking, a sustainable future and inspiring community leadership to be part of Auckland’s governance.

Energising Vector’s culture and strategy through smarter governance

The AECT election has been largely ignored by the media which means very few voters are aware of the issues facing the largest publicly owned trust in New Zealand and the governance of New Zealand’s leading energy infrastructure company.

Brian Rudman is the only commentator to provide anything thought provoking about the issues, making the suggestion in the NZ Herald that voter apathy (currently only 15.73% have voted with only one day left) justified the eventual owners of the Trust, the councils of Auckland, Manukau and Papakura making a serious bid to bring forward the eventual transfer. As he pointed out the community could do a lot more with the $98 million dividend than have it spread out in $320 lots to 273,000 plus households in the Trust area.

The 16 candidates have been unchallenged on their views on a range of other issues such as undergrounding, the strategic direction of Vector, the roles of the Trustees, trustee fees, the regulatory relationship, the sale of Vector, energy pricing, energy efficiency.  Perhaps if the Trust had done more to advertise the election and the role of the Trustees, eligible voters would have demanded more information to inform their vote.

As a consequence of the minimal election coverage the governance of Vector has also escaped scrutiny. The Trust as majority shareholder of Vector needs to be satisfied that the right governance structure is in place.  Only John Collinge and his ticket of Just Power – No Politics has highlighted concerns about the current governance.

One area that raises concerns about the current Trustees oversight of Vector, on behalf of energy consumers, is the lack of a clear company strategy that is understood by all employees and a negative management culture that has stifled performance and innovation.  The Trust needs to know that Vector is delivering on its core functions as an infrastructure company. This calls for a number of tough questions by the Trustees. How well is Vector performing in terms of what customers want – the delivery of reliable and safe energy? Is there a crisis loaming due to under investment and lack of maintenance in key areas? Is there a priority on doing the job right rather than increasing dividends (out of debt) at the risk of reliability and safety? Why is business as usual at Vector about handling a higher volume of power – has this has become the de facto strategy? What is the future direction that will maximise new initiatives and opportunities?

The company strategy should be clear and simple, providing the foundation for a healthy, productive and innovative business with highly engaged staff with a clear sense of purpose and healthy morale. Unfortunately there are indications that the culture at Vector has allowed a breakdown in the trust and respect at all levels of the organisation from the executive and Board down. The Trust needs to consider whether the positive flow of respect and strategic alignment at Vector has gone wrong and whether this means the company is not working as well as it could.  The Trust has the ability to influence the strategic direction of Vector and the management culture through the appointment of directors to the Board including two of the Trustees.

The current Vector management needs to stop hiding behind being a monopoly private sector company to acknowledge its place in the community providing an essential service. This will only happen once the Trustees are willing to step up into their role and demand much more from the governance of the company.

“Soft” conditions signal a hard landing for Vector in the new economy

 There are a number of statements and omissions that stand out from Vector’s recent operations performance summary and the claims made at the Annual meeting on Friday that highlight concerns Vector is not responding to current environmental challenges nor positioned to maximise value from the “new” economy.

 Vector’s traditional business approach has been to focus on increasing electricity and gas volumes and the number of new connections. It is convenient therefore to claim that current “soft” economic conditions are the big challenge ahead for the company while ignoring the impact of climate change, consumer demand for distributed renewable energy (which will lead to more potential customers using less traditional grid power and more home or street produced power traded via a smart grid) and the push to encourage energy efficiencies. These factors are now a constant for Vector to respond to regardless of a warmer than average August or the non-emergence of economic green shoots.

Vector is still silent about energy efficiency opportunities such as solar hot water. Nova Energy meanwhile has gone to market with a pay-on-your-bill in monthly instalments offer to consumers in the Auckland region. Vector, the largest lines company in New Zealand, operates two ripple control systems in both North Shore City and Central Auckland. Ripple control systems turn off householder’s hot water cylinders at peak times to lower or ‘shave’ peak loads. Joining the dots it should be Vector leading the charge in this area. Hot water control has always been a core part of the business but should now be positioned as a clear commitment to energy efficiency as part of the new business.

What the Trust, as the majority shareholder, needs to hear from Vector is how the company intends to actively invest and/or support market solutions that play a role in solutions for climate change for example solar, smart grid solutions, distributed renewable energy. At the moment Vector appears to be feigning a commercial interest to appease the regulator rather than acting through geniune commitment.

 The Trust should also be interested to hear how Vector is growing other areas of the company as well as adequately investing in the core business. The ambition is there to develop a high-speed fibre network but to date the performance of Vector Communications Limited has been disappointing and the subsidiary has failed to leverage off access to an extensive the electricity infrastructure.

 The claims by the Chairman that substantial costs savings have been made from efficiencies in this current financial year are not necessarily grounds for congratulations. Shareholders have enjoyed a healthy dividend this year ($98m) but this needs to be balanced with reassurance that Vector is making necessary capital expenditure to ensure reliable and safe supply. These cost savings have also been achieved by cutting back in the very areas of the business where investment is most needed. For example over the last year Vector has quietly disbanded its team working on renewable energy and restructured the Vector communications business into the commercial team thereby taking away its market prominence.

It is essential that the next operations performance summary provides a much more convincing account of how Vector is not just waiting for cold weather to improve performance but is leading the way in responding to and adding value from emerging  environmental opportunities.

Going underground – another reason to vote

Vector holds on to some of its profit to reinvest in the business and to pay for the undergrounding of power lines.   

The Trust has an agreement with Vector that commits it to spend over $10m a year replacing power lines and power poles with underground cables.

All AECT trustees were instrumental in bringing about the undergrounding programme, and this is a good example of why you should vote in the upcoming elections, and vote well. 

So far, more than 124km of power lines have disappeared underground, and I think that’s great however the Trust needs to speed  up the project because it adds value to the network and  at current rates it is likely to take 40 years to complete.

Media Release: Voters not aware of their valuable asset

Only 21% of eligible voters cast their votes in the last election for the trustees of the Auckland Energy Consumer Trust in 2006.  This low turnout is surprising because the asset of the Trust is worth approximately $1.5 billion – a 75.1% holding in Vector Ltd. The Trust received a $98 million dividend from its shareholding in Vector.  The low turnout is because power bill holders are unaware of the fact they are beneficiaries of the Trust and the important role that the trustees play in managing such a sizeable asset on behalf of electricity consumers. 
Voting papers will be arriving in mail boxes in the Trust district from Friday 16 October and independent candidate, Ms Coom is taking steps to ensure that voters know about the election by visiting all of the super city–sized voting district over the next two weeks.
“It’s always harder for an independent to get elected but I think it is worthwhile getting out there so that voters know about their Trust, their ownership of a valuable and essential power asset as well as their option to vote for a credible, community focused, non-political candidate as one of the five Trustees” said Ms Coom, a corporate lawyer, most recently at Vector Ltd.   “Quite frankly, I have no idea why the political parties are so involved in these kinds of elections – especially for a non-political issue such as electricity supply.  I would have thought the main criteria for elect-ability was competence to address relevant issues rather than association with voting blocs” she said.
Trust beneficiaries have recently been paid a dividend of $320 by the Trust but the majority are still confused about where it comes from. Common misconceptions are that the money is paid by retail companies, the defunct power board or even one of the party tickets.
 “We are entering a unique period in Auckland’s governance history with the implementation of the super city structure.  I think it is vitally important that Auckland’s energy consumers have someone on the board of trustees who is able to think about what is best for their interests without having to follow party allegiances” said Ms Coom.

How will you spend your AECT dividend?

The Auckland Energy Consumer Trust paid out $320 on 18 September to electricity consumers (income beneficiaries of the trust) in Auckland City (including Waiheke Island), Manukau City and the northern parts of Papakura. 
AECT are currently undertaking a campaign promoting how great it is to get the dividend and asking people to share their stories as to how they intend to spend the money. It is nice to think of the dividend as a windfall that can be put to a special purchase.
But of course there is no such thing as $320 of “free” money as it partly came from the profits Vector makes from charging the very people who receive the dividend – Vector’s customers who pay electricity line charges. It is fair to ask:  if this money is being returned to us, are we not currently being overcharged for electricity?  Many households will have paid their highest energy bills ever over a cold winter – the dividend could be used to benefit the community through lower power bills when it really matters.
As a trustee I will also be asking whether the large dividend Vector has paid the Trust means Vector is spending enough to give customers what they really want – a safe, reliable and economical service. All very well for households to have an extra $320 this month but not if this has to be spent on candles and torches when the lights go out!
Tell me your stories – is the power really in your hands?

Media Release

Transition Town Candidate to contest AECT election

Thursday 17 September 2009

Community candidate challenges Vector’s sustainability path

A corporate lawyer with experience working for regulated industries will stand as an independent candidate in this year’s election for trustees to the Auckland Energy Consumer Trust.

Pippa Coom, who has worked for Vector Limited, which is majority owned by the Trust, is also the first member of the Transition Town movement to stand for public office.

“I have the skills and experience to be an effective trustee. As the only independent community candidate I am committed to maintaining the Auckland electricity assets of Vector in community ownership and ensuring that Vector is in the best position to respond to the current environmental challenges ” says  Ms Coom.

Pippa Coom launched her campaign for election at the monthly meeting of Grey Lynn 2030:Transition Community, which is part of the international Transition Towns movement.

Suzanne Kendrick, Grey Lynn 2030 steering committee member who is supporting Pippa’s campaign says

“We are very pleased to support an independent community candidate for a community trust.

“It is in the interests of the beneficiaries of the trust – all those with a power bill in greater Auckland, – that the trustees be a good representation of us all and bring a diversity of perspectives to the decisions the Trust makes”

“Business as usual’ in today’s world is not an option as we transition to a low carbon economy and toward more benign methods of energy production, distribution and use. Pippa, through her background with the Transition movement will bring this vital, but currently missing, perspective to the Trust as a trustee” Ms Kendrick said

The election for the five trustees is scheduled from 15 October by postal ballot, with polling day on 30 October.