Considering the impacts if ENL not-for-profit

A109 Light Utility Helicopter flight with mayor Gisborne City from the air in November 2023.

Opinion

The proposal from the Tairawhiti Residents Association for community-owned Eastland Network Ltd to become not-for-profit appears to have strong support, with 72 percent of the 346 votes cast so far on the issue in favour, in this week’s poll on our website.

While others have pushed for ENL owner Eastland Community Trust to start a rebate scheme where the company’s profits are returned to the region’s electricity users, who are ECT’s beneficiaries, TRA’s chairman last year pointed out the tax inefficiency of such programmes and said it would be better if ENL simply charged less for its distribution services.

TRA will submit to councillors on this issue, for it to be considered in the annual statement of intent process the council works through with ECT early each year.

The obvious benefit for electricity users of such a move would be cheaper power — possibly up to 10 percent less.

One consideration is that every electricity user would benefit, with bigger businesses, including nationally and internationally-owned companies, benefiting the most in what would effectively be a Gisborne community subsidy.

If the council does give this proposal serious consideration, and in turn so do ECT trustees, the implication at front of mind would be the large cut to ECT’s dividend from Eastland Group.

Of last year’s $7.82m dividend (53 percent of the company’s $14.8m profit), $3.56m or 45 percent was attributed to ENL.

ECT earns $2.1m interest on $30m it has lent to Eastland Group and also has investments outside the group. Its total surplus after income tax last year was $9.9m; ECT without ENL profits would have received 36 percent less, $6.34m.

Last year the trust distributed $4.3m in grants to 61 community organisations; its CEO has said it will distribute up to $10m this year.

It is also worth noting that the framers of the ECT deed 24 years ago did not envisage such a path for the trust, with its purposes including the phrase “an acceptable commercial return to the company”.