Tauranga Energy Consumer Trust has announced it will consult its beneficiaries on a proposed restructure.
Trustpower recently announced a strategic review, including a potential sale of its retail business.
TECT trustees said the potential Trustpower sale meant TECT has to change its structure, but their proposal would protect the TECTrebate for all existing beneficiaries for approximately 30 years.
"A sale of Trustpower's retail business to a third party would mean that our beneficiaries would no longer be Trustpower's 53,000 Tauranga local retail customers," they said.
"If we don't act now, TECT's beneficiaries would only be a small number of larger commercial electricity users that will remain customers of the Trustpower Generation business.
"We need to update the structure of TECT to ensure that we meet our obligations under the trust deed and that TECT is meeting the purpose it was established for."
The proposal aims to balance protecting the annual TECT rebate for existing beneficiaries, and the purpose TECT was established for: to provide long-term benefit for all the residents and communities of Tauranga and Western Bay.
"Even if the current strategic review by Trustpower does not lead to a sale in the short term, it demonstrates the ongoing uncertainty of the ownership of the retail business and the trustees believe that the structure of TECT needs to change to future-proof the trust and the rebate," the trustees said.
"This proposal ensures existing beneficiaries of TECT will continue to receive the TECT rebate, if they remain as customers of Trustpower or a buyer of Trustpower's retail business. Nothing will change for beneficiaries and the rebate will be protected."
Under the proposal, TECT would keep enough money to pay the rebate to existing beneficiaries for about 30 years.
"The remaining funds will be transferred to a new long-term community trust, focused on grants for major transformational projects and important services for our region such as our local rescue helicopter service.
"The Western Bay's growing needs in terms of infrastructure, physically and socially, are only going to increase, which is where TECT can play an increasingly critical role with this new structure in place.
"The transition to a community trust will also resolve several other issues with the existing structure that have developed in recent years and pose ongoing risks to TECT.
Trustpower said its existing customers would have "very similar" rights to the current rebate under TECT's proposed changes to the trust deed.
"We know the TECT rebate is valued by our customers and it's pleasing to see our customers' rights are largely retained under the proposed amendments to the Trust deed," Trustpower chief executive David Prentice said.
"The trust's proposal is well-thought out and provides sufficient detail for our customers to make an informed decision about amendments to the deed."
Prentice noted the company had opposed a previous trust proposal to reform the deed because it would have fundamentally changed beneficiaries' entitlement – the TECT rebate.
"This proposal is noticeably different, as it preserves our customers' rights and is put forward as a result of our announced strategic review of the business."
TECT would retain enough money to pay a yearly rebate to all existing beneficiaries (as of Thursday, January 28) for approximately 30 years. The intention is to retain enough funds to pay, based on current financial projections, rebates until December 31, 2050.
Beneficiaries are essentially a customer of Trustpower in the defined Tauranga and Western Bay of Plenty District who eligible to get a rebate.
The rebate will be $500 a year for the first 10 years, will increase to $600 in 2030 and to $700 in 2040, to account for inflation. $500 was the averaged median rebate payment over the five previous years.
Rebates will be paid on the usual six-monthly TECT cycle.
To get a rebate a beneficiary must remain a customer of Trustpower or the buyer of the retail business in the district - subject to limited exceptions. If you leave, the rebate stops.
New customers and the current customers of the new business do not become beneficiaries.
On December 31, 2050 TECT must be wound up, if it has not been wound up earlier for example, because the trust fund has all been paid out, and its remaining assets will go to the new TECT Community Trust.
Step 2: The balance of TECT's funds (including its shareholding in Trustpower) would be transferred to a new long-term community trust focused on grants for local community projects.
