TECT restructure: High Court signs off plan, TECT cheques to be phased out

The High Court has given the sign-off for TECT to continue with its restructuring plans, despite some community opposition. Photo / NZME

The Tauranga Energy Consumer Trust is "looking forward" to implementing restructure changes despite push-back from community members, including people who previously served on the trust.

The trust, known as TECT, funded predominantly through its ownership of around 27 per cent of electricity company Trustpower, went to the High Court last year to gain clearance to restructure its operations. The trust was successful.

The trust's main purpose is to provide an annual rebate, typically about $500, to about 47,000 local Trustpower customers. That rebate exhausts around 80 per cent of the trust's outgoings.

The remaining 20 per cent is redistributed via community grants annually.

The restructure came after Trustpower made the decision to sell the retail arm of its business to Mercury, affecting the trust's ability to pay a rebate to customers of a company they had no stake in.

The restructure would see the trust ring-fence a pool of funds to pay Trustpower customers the rebate, which would be officially wound up in 2050 or when that pool of cash runs out.

Only existing Trustpower customers would be entitled to the rebate and if customers choose to leave at any point, they lose their right to the rebate permanently.

A new trust would be created. It would hold and manage TECT's assets plus issue community grants and donations.

The proposed restructure was signed off unanimously by TECT's six trustees, and a public consultation period was held. Trustees said at the time they believed a restructure was fundamental to TECT's survival.

Currently, around 80 per cent of profits are distributed via rebate cheques, while the rest goes to causes such as the TECT Rescue Helicopter. Photo / NZME

TECT promised to take its proposal to the High Court for sign-off, after a consultation period. As part of this process, 12 TECT beneficiaries opposed the move.

Their written submissions to the court included allegations ranging from the trust "pre-determining" the outcome of its proposal, to intentionally misleading the public about the outcome of a restructure - allegations the trust denied.

Former deputy chair of the trust Bruce Cronin submitted the current trustees were acting outside the interest of the trust's beneficiaries, accusing TECT of stripping the Tauranga public of its assets.

The trustees had acted "unconscionably", Cronin's submission stated.

Norman Mayo, a founding trustee of TECT, also raised concerns about the trust overlooking lifelong beneficiaries in favour of more wide-reaching community charity work.

"TECT was never conceived as a charitable trust. I have noticed with concern over the years, a drift away from the original intent of the trust as a consumer trust. It seems money is flowing to all sorts of organisations far different from the original intent," Mayo's submission stated.

Trustpower's former community relations manager Graeme Purches stated there were "clear issues of predetermination" and "credible consultation" when it came to the trust's proposal.

Jane Anderson QC was appointed by the court to summarise the concerns of those opposing the restructure.

Tauranga resident Bruce Cronin opposed the proposed restructure, saying the trust should exist for the purpose of benefitting consumers. Photo / NZME

Anderson determined the overwhelming theme of those voicing their opposition was a sense of the trust changing its scope, using assets to act primarily as a charitable organisation, rather than for the direct benefit of consumers.

The trust's original aim of subsidising Trustpower consumers was evident in the trust's title - Tauranga Energy Consumer Trust, as well as the language used in TECT's trust deed, Anderson submitted.

In his decision, Justice Jan Doogue found that the proposed restructure was proper and lawful.

Speaking to the suggestion the trust was designed specifically to benefit "consumers", Justice Doogue found a charitable-focused trust does allow benefits to be conferred on consumers via "projects or other community initiatives", not necessarily just rebate cheques.

Those projects and causes supported by TECT, such as educational scholarships and the local rescue helicopter, fell within the scope of benefitting consumers.

"The wellbeing of consumers, those who live in the same household as a consumer or in the same community as a consumer, will be enhanced by such initiatives."

Justice Doogue also determined that suggestions the trust attempted to mislead its beneficiaries were unsubstantiated.

The trustees went over and above the required consultation, by taking measures such as holding public meetings to talk to the community about the proposal, Justice Doogue said.

Commenting on the allegation of pre-determination, Justice Doogue said an allegation chair Bill Holland forced the restructure through based on his personal view was equally unfounded.

"The courts accept, even expect, that decision-makers may have pre-existing views. That is not an issue as long as decision-makers approach the question with an open mind."

Justice Doogue also rubbished accusations that Holland had a conflict of interest when voting on the new proposal, saying there was no evidence of such a claim.

TECT chair Bill Holland says the trust is now focused on the implementation of the restructure. Photo / NZME

Summarising the case, Justice Doogue said the process undertaken was "robust."

In a statement to the Times, Holland said now the court had signed off on the proposal, trustees were now working through the next steps "and will provide a full update to the Tauranga and Western Bay community shortly".

"The High Court decision marks the end of a comprehensive 11-month engagement period with the local community where strong support was received for the proposal. We look forward to now proceeding with the implementation of the restructure."