Helen Francis: Power play: your bill explained

Helen Francis

I have been an elected trustee of the Hawke's Bay Power Consumers' Trust for almost four years and feel I now understand pretty well how the trust and Unison (our locally-owned lines company) operate. But I am not at all surprised about the confusion and misinformation in the recent letters written in Hawke's Bay Today about the trust, Unison and the electricity industry and how these impact upon our power bills, as the way this is organised is muddling to say the least. It is certainly quite a complex set-up to understand how electricity use corresponds to the power bill we receive. I thought it might be useful to write a summary of what I have learned during my time as a trustee.

In 1992, the government of the day decided to split the power companies up into lines (or network distribution) companies, retailer and generation businesses and transmission companies. For Hawke's Bay, the Hawke's Bay Power Consumers' Trust was formed to hold the shares of the company (Unison) and its distribution network on behalf of the consumers. In 1998, there were more changes, which required the separation of distribution (the regulated part) and retailing (the competitive part) of electricity. Since then, Unison has been responsible for distributing power throughout Hawke's Bay.

Of the 29 distribution companies in New Zealand, 19 are still 100 per cent trust-owned. Three are trust/local authority-owned; three are local authority-owned and the remaining four are a mix of co-operative, joint venture and public-owned. An example is Wellington, where the company is now overseas-owned and profits go to offshore investors.

It starts with generation - where companies like Meridian Energy generate electricity from largely renewable sources, such as hydro dams and wind farms. The electricity generated is then picked up by the national grid, Transpower, which transmits the electricity to all regions across New Zealand. Companies like Unison are distributors, and are responsible for taking the power from the national grid and distributing it across the regions they service (so, for Unison, to Hawke's Bay, Taupo and Rotorua). Then the retailers - companies like Contact Energy, Trustpower and Energy Online - manage customer needs and invoicing of electricity use, as well as passing on the charges Unison sets.

The breakdown of our power bills reflects the complexity of the industry. There are a number of players - all of whom have charges they need to pass on so that ultimately we can enjoy the lifestyle choices electricity enables. The price you pay to your retailer for electricity covers three main costs- charges from Transpower for transmission; charges from Unison for distribution; and charges from your electricity retailer for the electricity you use. For every $1 charged to your power account, it is roughly made up like this:

Retailers: 48c

Distribution: 27c

Transmission: 11c

GST: 13c

EA levy:1c

But these amounts are different for everyone and depend on the power scheme you are on, how much power you use, where you live (especially how rural) and several other factors.

Certainly, the thing I have struggled most to understand is the regulations set by the Commerce Commission. The prices Unison sets have to fit in with the complex rulings from the Commerce Commission that set tariffs for the coming financial year. Some costs, which are outside of Unison's control, such as transmission, local body rates and government levies, are recovered through line charges.

The company which you and I have our power bill with, such as Contact Energy, Meridian or Energy Online, are retail companies. Unfortunately, not all of these companies set out clearly how much of our monthly bills are related to which part of the industry. In the presence of a price hike, you can't tell how much of the increase comes from which part of this set-up and it seems to me there are a lot of white lies from retailers about this.

The Electricity Authority is looking at ways of improving transparency, but has found that many consumers do not want extra information on their bills. Some retailers do separate out each part of the bill so if this information is important to you, it pays to shop around.

Each trust is guided by a locally drawn up Trust Deed, which gives us as trustees guidance on what our obligations are. Our main role is to ensure the value of our consumer-owners is protected and enhanced, which we do through monitoring the operational and financial performance of Unison.

We ensure targets are measured against the company's Statement of Corporate Intent, we appoint company directors and also make sure Unison continues to uphold its corporate social responsibility through sponsorship and so on.

The benefits of trust ownership are also reflected in other ways, such as the undergrounding of Unison's overhead lines throughout Hastings and Napier; additional investment in rural areas to further improve reliability; as well as assisting consumers with energy efficiency and conservation projects.

As a trust, we also determine the amount of trust funds to be paid to consumer-owners as a dividend or other ways.

For 2015, consumers will again receive a dividend cheque, which will be distributed later this year.

-Helen Francis is an elected trustee of Hawke's Bay Power Consumers' Trust

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