Trustpower to probe TECT proposal to ditch customer rebates for community projects

Trustpower will take a close look at a proposal by cornerstone shareholder Tauranga Energy Consumer Trust to ditch customer rebates in five years in favour of funding community projects.

The trust owns 26 percent of Trustpower and distributes the bulk of its income to the power company's Tauranga and Western Bay of Plenty customers. TECT has told Trustpower it plans to transfer its assets into a new entity to distribute funds to community and charitable groups, aiming to triple the amount available for those projects, and has asked the power company to support the plan.

The trust intends to make a one-off payment of $2,500 to eligible customers representing five years of payments at the current average rebate and will continue payments until 2022, after which TECT would be wound up.

"What the trustees are proposing to do will fundamentally and permanently change the nature and purpose of TECT," Trustpower chief executive Vince Hawksworth said in a statement. "Trustpower will therefore be scrutinising the impact of this proposal on its local customers, and will be seeking feedback from these customers before forming a view on what actions it should take in respect of this proposal. It will also be taking legal advice as to whether the trustees' proposed actions are lawful (given the fundamental change to the nature and purpose of TECT)."

The Tauranga-based electricity generator and retailer is enjoying a strong year for its operations, with the North Island hydro dams flush with water at a time when rival South Island operations have gone through a dry spell.

Of Trustpower's 395,000 customers as at Dec. 31, some 273,000 were electricity clients. The power company has been building up a base of clients who take bundled services - including gas and telecommunications - which has a lower churn rate than the national average, with 98,000 customers taking two or more services as at Dec. 31, up from 88,000 a year earlier.

TECT's proposal was released for consultation today, which closes on March 1.

Trustpower shares last traded at $5.92 and have gained 24 percent over the past 12 months.

(BusinessDesk)