Chance for big power play

TrustPower could foot it with the big boys if the various players come to the party, MARK REYNOLDS reports.

New Zealand's third-largest retail electricity company will be formed if a quartet vying for control of Tauranga-based TrustPower settle their differences.

The enlarged company would have a retail electricity presence large enough to foot it with market leaders TransAlta and Contact Energy. It would also have a strong retail gas customer base throughout the country.

"There is an opportunity to bring together some assets that are complementary to each other and create a significant energy presence," said Jan Beange, chair of the Tauranga Energy Consumer Trust.

"What we don't want to do is lose an opportunity to significantly move the company forward," she said.
Jan Beange, a Tauranga-based lawyer, is now the key player in the battle for control of TrustPower.

Through some shrewd legal threats she has effectively scuttled a play by Wellington-based investment banker Lloyd Morrison and United States-based Alliant International to wrest control of TrustPower from community shareholders.

The consumers trust Jan Beange heads owns a 22.6 per cent stake in TrustPower, but had risked being sidelined by a deal struck between Alliant and a listed investment company managed by Mr Morrison, Infrastructure and Utilities NZ (Infratil).

Infratil and Alliant in mid February formalised an agreement to "work together on future electricity investments in New Zealand", using TrustPower as a vehicle to do that.

The companies had previously worked together as minority shareholders of smaller North Island power companies Powerco and CentralPower.

They were forced to strike the formal agreement on TrustPower after TrustPower's long-standing community-backed chairman Avon Carpenter led a move to dilute Infratil's influence over TrustPower.

Mr Carpenter, with the help of sharebroking firm JB Were, brought in Australian Gas Light Co (AGL) as a fourth main shareholder of TrustPower. This was done by granting AGL a 7.6 per cent stake in TrustPower through a surprise special issue of 14.2 million new shares in the company.

The special issue came as Infratil was negotiating with the Rotorua Energy Charitable Trust to buy a further 16 per cent in TrustPower, which would have given it more than 40 per cent of the company. The Rotorua trust stake was subsequently partly onsold by Infratil to Alliant as part of their formal agreement.
Mr Carpenter has always maintained that the move to bring AGL into the fray was simply in the best interests of TrustPower's continued business.

"They had some assets that they could bring to the negotiating table that other potential shareholders did not have," he said.

In particular, AGL is a one-third shareholder in Natural Gas Corporation and stands to take control of that company's retail electricity and gas operations when NGC is split into three later this year.

The addition of NGC's retail business would give TrustPower about 330,000 energy customers, which is about the consumer base that most industry analysts agree is the minimum size for a viable retail energy operation in New Zealand.

"We think there are more options for [TrustPower] if AGL is involved as a significant shareholder," Jan Beange said. "I hope that all parties can see that as the path ahead."