No-show from customers at power review

Scanpower chief executive Lee Bettles. Photo / File

"If they were dissatisfied they'd be here," was the reaction to the no-show by consumers at Scanpower's five-yearly ownership review meeting on Tuesday.

Scanpower's Customer Trust is required by law to review its ownership every five years and part of the review involved a customer survey and Tuesday's public meeting.

"We had the highest response rate to our survey this time with 32 per cent responding," Lee Bettles, Scanpower's chief executive said.

From 4681 households, 1402 surveys were returned, with 96.5 per cent in favour of continuing the current ownership model. Just 1.5 per cent wanted customers to hold shares, with six people (0.6 per cent) wanting outright sale of the customer-owned business.

"We received no submissions on the document, so we assume everyone is happy," Stuart Smith Trust member said. "If people had strong feelings about the trust they would have let us know."

Chairman of the trust Keith Cammock agreed.

"We've gone through the process and the customer trust will continue to exist for a further five years," he said.

The Trust Deed requires the Ownership Review Report to contain a comparison of the company's performance with the performance of other companies engaged in energy distribution.

With 6689 customer connections, Scanpower is the second smallest electricity distribution network in New Zealand, accounting for 0.2 per cent of the national total, with the industry dominated by the top five lines companies who collectively supply 65 per cent of connections in the country.

At $239 per connection, Scanpower has the seventh lowest operating cost when measured on this basis. This is significantly lower than the national average of $343. Scanpower has the lowest operating expenditure per kilometre of line at $1515. This is less than half the national average of $3463.

For the 2015 financial year, Scanpower showed a return on investment of 7.5 per cent, ranking it as the third highest of the 29 lines companies and 50 per cent higher than the national average of 5 per cent. This return is also before the deduction of discounts which are paid to customers during the year.

The lines company sits among the top most reliable companies on the network.
When compared to the entire country, Scanpower's line charges for typical domestic consumers are below average, 26th out of 42, but its charges are lower than all its immediate neighbours.

"The review reflects well on Scanpower in terms of reliability of service and our lower charges," Mr Bettles said. "All the figures bear this out. Scanpower performs strongly relative to other industry participants, despite the challenges imposed by the physical and geographical nature of the network."

While just six people responded to the Scanpower customer survey wanting an out right sale of the business, which is allowed since the introduction of the Energy Companies Act 1992, several former regional lines companies opted to sell their businesses to third parties. For example, the Central and Wairarapa networks sold to Powerco (now owned largely by the Queensland Retirement Corporation), as did those in and around Wellington (Wellington Electricity is now owned by a Chinese infrastructure company).

This resulted in a sudden and significant windfall gain to the customers of the day, but this time in the form of cash rather than shares.

This one-off gain is the primary advantage of the outright sale option and while it's not possible to accurately assess what the total proceeds might be for Scanpower customers, based on shareholders' funds and the number of customers a fair estimate might beabout $5000 per customer.