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2020 WESCT Election - Frequently Asked Questions

How can I get a cheaper bill?

Erin Firstly, as a nation we need to understand that the price you are charged for your energy bill is only half of the problem.

The other half, which can be influenced and changed, is how you use the energy in your home.

Most individuals and families in New Zealand, do not understand how their energy is charged, nor do they understand that their behaviours and attitudes towards power usage is reflected within their energy bill each month.

We need better education around energy use, and how simple changes in everyday activities can ultimately affect the energy bill we receive each month.

William We all want a cheaper bill.

The best and first place to start with this is the bit I find most difficult, my own behaviour, looking in the mirror.

Electricity is energy just like the fuel you put in your car, it costs money to generate it and get it to your home, so it has a cost, but like your car if you drive it economically you use less.

We can influence our use by insulating our homes. The Maru trust may be able to assist with this. Making sure we have efficient electrical appliances, when we use our power (off peak is cheaper, we have timers on our pumps), how much hot water we use, turning off unused appliances and lights.

Also go online and check you are with the best electricity retail company - https://www.powerswitch.org.nz/whatsmynumber

Janette The graph below shows Otorohanga electricity costs per kWh compared to the rest of NZ.  Total average cost 33.53 c/kWh in Otorohanga versus 30.70 c/kWh average for NZ.  The orange bars show the portion of the total electricity cost which is charged by the lines companies - made up of Transpower (getting the electricity from where it is generated) and Distribution (getting the electricity from the national grid to your home).

While Otorohanga is 2.83 c/kWh higher than the national average it is not outrageously higher and this does not include the discount received as owners of The Lines Company through WESCT. 

2020-05-15 May Graph

We learned at a recent conference that the price per unit of electricity in NZ is very comparable to other OECD countries however it is the QUANTITY of electricity being used that is the main issue for affordability in NZ.

The best way to get a cheaper bill is through good energy efficiency measures:

  •  Good home insulation – depending on your circumstances Maru Trust may be able to assist with the costs.
     
  • When buying appliances – look for the energy efficiency star ratings.  Buying an appliance with more stars means it will use less electricity to run.  The savings could be considerable over the lifetime of the appliance.   To compare different models and their annual running costs go to https://tools.genless.govt.nz/individuals/rightware-for-the-home/#!/
     
  • Insulate your hot water cylinder – according to this Lines Company Flier – while your hot water cylinder is heading it costs as much to run per hour as a clothes drier.  Insulating it means it will stay warmer for longer and use less electricity  https://www.thelinescompany.co.nz/site/uploads/2019/Communications/EnergyEfficency/Efficiency-Rollfold-80x110mm-Appliance-costs_04-September-2019.pdf
  • Turn lights off when not in use – 10 x 100 Watt light bulbs = 1kW – as much electricity as a small heater.  Even better use LED light bulbs they use a fraction of the electricity of traditional light bulbs – this can be a huge saving over a year.

  • If possible and practical use electricity during shoulder and off peak times rather than at peak times.

  • Keep an eye out for the energy efficiency tips on TLC facebook page, in the Waitomo News and on the fliers with your bill.  Also the save energy section on the website. https://www.thelinescompany.co.nz/my-account/save-energy/

 

What do we think about selling the company and will that get me a cheaper bill?

Erin I personally do not believe selling the company is in the best interests of our beneficiaries, now and in the future, and I also believe it will not get you a cheaper bill.

Many people in our community, whether they are beneficiaries or not, believe that The Lines Company charge exorbitant prices, and are rolling in money, in fact, this was exactly how I felt three years ago, before I became a trustee. 

Since being elected in 2017, I have come to realise that whilst The Lines Company is a monopoly (they don’t have any competition in our area), they are still unable to charge us whatever price they like. 

The company is heavily regulated by Government and in fact, the amount that they have been allowed to charge up to, they currently choose not to do this, because customers would be realistically unable to pay those prices.  This is a choice the company makes and is a decision that has always been backed by the Trust.

In addition, if we were to sell The Lines Company, there is no guarantee on what prices the takeover company would choose to charge, and given there will no longer be a Trust to protect beneficiary and community well-being, we will all be at the mercy of whatever the new company decides to charge us. 

At present, under the ownership of WESCT all beneficiaries can realise a discount each year, which is normally to the value of 2-3 months’ worth of lines charges.  As a Trust we can influence this discount on our beneficiaries’ behalf - if it is no longer owned by WESCT we will lose the ability to do this.

As a community minded person, I also turn my thoughts to the economic wellbeing and development of our towns and communities within the WESCT region.  The Lines Company currently employs a significant number of staff who live locally, and a number of these jobs could be pushed out of our region, if the company were to be sold.
William Short answer, I don’t believe it will get you a cheaper bill, 5 reasons why.

1. TLC and all the other electricity distribution providers being natural monopolies are heavily regulated by the Government.

The Government sets a maximum allowable revenue for these companies. TLC sets its charges so its income is below that threshold. A private company will not have any motivation to do this.

2. TLC then gives its beneficial customers a discount which roughly equates to 2- 3 months credit on your lines bill.  You will not get this if the company is sold to a private company. Why? This is essentially the dividend that a private company will take as reward for owning TLC if we sell it.

3. Owning TLC locally means we have influence over its behaviour as an essential provider of energy in our area, you vote for us and expect us to get it right (and some people rightfully ask the trustees hard questions). We are proud of the progress we have made with the culture of TLC and the local jobs being provided, the main office being in Te Kuiti. There is no guarantee these jobs and service will be retained in our area if sold.  Also, a local company gives back in its local community with grants and scholarships.

4. TLC has investments outside our area and the profits are part of your discounts so helping to lower your energy bills.  This is the best strategy to lower our lines company bills.

 

5. We all want reliable power, not too many outages and quickly fixed, this is something we can use as a performance indicator if we own the company.

If we own it, we control it we reap the rewards of profit through our discounts, reliability and a great local business providing jobs and other sponsorships, grants.

Janette As per the detailed information in ownership review https://www.wesct.org.nz/resources/ownership-reviews-2020/ – I do not believe that selling the company would be in the best long-term interests of individual customers or the community as a whole. 

The most likely purchaser(s) would be looking for an investment and to maximise their return from that investment.  That would likely result in an increase in charges and/or a reduction in capital expenditure/maintenance to maximise profits.

Community ownership has meant – that in the nine years to 31 March 2019 customers were billed $30m less than was allowed by the Commerce Commission and that a further $30m of discounts were returned to customers in the past six years.  Neither of these things would have happened if TLC were owned by investors wanting to maximise profit for their shareholders. 

Without community ownership it is likely that in recent years we would have paid $60m more for our lines fees than we have done.

 

What are your thoughts on direct billing versus one bill?

Erin As the person who pays the bills in my family each month, I am always looking at ways to be more efficient, so having one bill for me seems simple and easy.  However, in this instance, I find myself torn.

Receiving two bills each month for some individuals, seems to have the perception that you are paying more, or paying twice.  To be clear, this is not the case.  You are simply receiving your bill in a more transparent way, which no other New Zealander outside of The Lines Company network area can do. 

You can see exactly what the cost of your lines charges are, specific to how you use your energy each month.  You can then use this information to make decisions about your behaviour with energy use, which can then help you to reduce your lines and power bill each month.

The issue that arises when moving to one bill, is not with The Lines Company, but more so with the energy retailers, such as Genesis, Mercury or Pulse, just as examples.  All of these retailers package their bills in a different way and make it really hard for customers to compare pricing easily with other providers.

The decision around one bill does worry me.  I worry about employment, and how this decision will directly affect staff and their families, and the wider community. 

The Lines Company is a large employer in our area, and when redundancies occur at big entities within small towns and communities, it has a ripple effect within schools, and other local businesses who rely on these families to support their financial wellbeing as well.
William I always thought this was a simple question, of course one bill would be better, but the more I have learnt the more complex it is. That is why it was not done yesterday.

One bill will not necessarily mean you pay less overall for your power (see the graph Janette has posted, to compare with other areas), two bills splits out the different costs meaning you can identify easily if you are paying more than others for your electricity.

 Separate billing also means as customers you know who connects you to the power grid, consumers in other areas do not have that connection and vice versa TLC knows its customers which many Electricity Distribution Businesses do not.

This is a decision for the company and its directors, when they have finished their investigation in to one bill and clearly know the advantages and dis-advantages they will consult with WESCT and the right decision will be made.

Janette Moving away from direct billing would be a major change for The Lines Company and it is absolutely critical that all the advantages and disadvantages are carefully examined.

TLC management and the board are still carefully and thoroughly working through these advantages, disadvantages and implications.  When they have completed their work, there will be a full and open discussion with WESCT which will include sharing of confidential information as to what they looked at and why they came to the conclusion that they did.

We are fully aware of the amount of work, questions and analysis that has gone into the board and management evaluating the options of direct billing versus one bill. 

As Trustees we will not form an opinion until we are privy to all the information – we would be failing in our duties as Trustees and diligent shareholders if we jumped to conclusions without all the facts.

The board and management have a clear understanding of what is important to the beneficial owners.  WESCT have communicated this through numerous conversations and through the formal letter of expectation from the Trust which is included at the front of the annual Statement of Corporate Intent.  2020-21 Annual Statement of Corporate Intent

TLC have been asked to consider issues like energy hardship and affordability and being a large local employer.  Having locally based jobs is important – especially ones which provide local career paths and training.

 

What do you think about having a quota for local directors?

Erin I would love to have more local directors on the board of TLC; however, the reality is, that we currently do not have the pool of talent or experience in our area to provide for this. 

We currently have two directors who were raised within the wider King Country area, who both bring significant experience to our company but also came from a limited pool of local applicants.  However, as a Trust and as a Board this has been recognised, and the Board have already put in place a ‘Future Directors’ programme with the support from the Trust, in the hope of building up individuals so they can one day be a director of TLC or any other large entity within our community.

One of the key roles of the Trust is to recruit directors for the Board.  Over the last three years, I have been involved in all director recruitment and appointments, and can advise that we received a significant number of applications, and of those I can count on one hand, the number of local person/s or local directors that applied.  At the time of recruiting these directors did not have the experience or the specific skill set being sought after at that time. 

My opinion is to find the best person for the job, and if that happens to be a local person, then great, but if not, we continue searching until we find the right person to represent our company and who will look to do the best for our beneficiaries. 

As a Trust we are here to provide input on a local level, and the Board regularly seek our feedback and guidance on specific issues that would concern our beneficiaries, which counteracts the argument for a local director quota in my mind and shows the strong relationship between the Board and the Trust, and another reason for the Trust ownership model.

William
I would love to have more local directors.   We currently have two directors who were born and raised in our network area.

The reality is TLC is a very complex business and to find capable directors with the electrical engineering, financial business, Information Technology (IT), Human Resources (HR), Health and Safety  or with other key capabilities and with the level of experience who I feel comfortable running our company is hard in a small country, in a small community even harder.

I am supportive of TLC having a future director position for locals, we are building local director capability.
 

As trustees we would be negligent in my opinion to have a local director quota, we do not have the depth of talent in our community with the skills needed and the few that do have that capability have not applied when we have advertised for TLC directors.
 
Janette I definitely think all trustees should live within the area.  I believe it is very important that all the trustees are customers and understand on a day-to-day basis what it is like to live in the area and the importance of TLC as a community owned asset.  Erin, William and I all live within the WESCT district and we are all customers on the TLC network.

As for directors – we need to be employing the right skills, experience and ethics.  We are entrusting the directors with our investment and need to ensure we have the very best people on the board that we can recruit. 

There should be a higher weighting given to local applicants however the appointment needs to be the best candidate for the position regardless of whether they live locally or not.

Any kind of quota could have a very negative impact and put off other directors from applying for positions with TLC.


 
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