KEY POINTS:
Three of Vector's independent directors resigned today, citing concern with the governance of the energy company and the leadership of chairman Michael Stiassny.
Observers believe that Vector's recent difficulties with the Commerce Commission could in part be responsible for the boardroom split.
Vector shares were dumped on the
news. They fell 22 cents, or 9 per cent, to $2.31, wiping $222 million off the value of the company.
In a brief statement Mr Stiassny thanked the directors for their contributions and said the rest of the board comprising himself Bob Thomson, Karen Sherry and Shale Chambers would continue to govern Vector with the full support of the major shareholder.
"A search for new directors will be conducted as soon as possible in consultation with the company's major shareholders," the statement said.
In August, the Commerce Commission sparked investor outrage when it declared its intention to take control of Vector's prices.
It accused the firm of earning excess profits and subsidising the beneficiaries of the Auckland Energy Consumer Trust, the powerlines company's major shareholder.
The watchdog estimated Vector would need to reduce it charges by 2 per cent and 11 per cent over the next two years to bring its returns to a normal level. But Vector responded by putting on hold $630 million of spending - a move that was matched by other large infrastructure investors.
Vector said it could not guarantee the security of Auckland's power supply because the commission was not letting it make enough profit on its investments. Vector also noted it had already committed to remove the imbalances, which it claimed were a legacy of acquisitions of firms that had employed different pricing practices.
Investors, meanwhile, said the commission was acting unreasonably, especially because its threat came after only minor breaches of the regulations. These breaches included Vector's recovery of $76,000 more in transmission charges than forecast and breaches of service quality commitments following extreme weather.
Two months later the Commerce Commission backed away from harsh regulation of Vector.
In a deal that avoids the commission taking control of Vector's prices, the firm has agreed to charge all of its customers equally by 2009.
The deal removes subsidies to Auckland customers that came at the expense of those in Wellington. But the agreement makes no reference to the commission's earlier claims Vector was generating an excessive return.
Vector is 75 per cent owned by the Auckland Energy Consumer Trust, a public body.
- NZHERALD STAFF and NZPA