I have been an elected trustee of the Hawke's Bay Power Consumers' Trust for almost four years and feel I now understand pretty well how the trust and Unison (our locally-owned lines company) operate. But I am not at all surprised about the confusion and misinformation in the recent letters written in Hawke's Bay Today about the trust, Unison and the electricity industry and how these impact upon our power bills, as the way this is organised is muddling to say the least. It is certainly quite a complex set-up to understand how electricity use corresponds to the power bill we receive. I thought it might be useful to write a summary of what I have learned during my time as a trustee.
In 1992, the government of the day decided to split the power companies up into lines (or network distribution) companies, retailer and generation businesses and transmission companies. For Hawke's Bay, the Hawke's Bay Power Consumers' Trust was formed to hold the shares of the company (Unison) and its distribution network on behalf of the consumers. In 1998, there were more changes, which required the separation of distribution (the regulated part) and retailing (the competitive part) of electricity. Since then, Unison has been responsible for distributing power throughout Hawke's Bay.
Of the 29 distribution companies in New Zealand, 19 are still 100 per cent trust-owned. Three are trust/local authority-owned; three are local authority-owned and the remaining four are a mix of co-operative, joint venture and public-owned. An example is Wellington, where the company is now overseas-owned and profits go to offshore investors.
It starts with generation - where companies like Meridian Energy generate electricity from largely renewable sources, such as hydro dams and wind farms. The electricity generated is then picked up by the national grid, Transpower, which transmits the electricity to all regions across New Zealand. Companies like Unison are distributors, and are responsible for taking the power from the national grid and distributing it across the regions they service (so, for Unison, to Hawke's Bay, Taupo and Rotorua). Then the retailers - companies like Contact Energy, Trustpower and Energy Online - manage customer needs and invoicing of electricity use, as well as passing on the charges Unison sets.
The breakdown of our power bills reflects the complexity of the industry. There are a number of players - all of whom have charges they need to pass on so that ultimately we can enjoy the lifestyle choices electricity enables. The price you pay to your retailer for electricity covers three main costs- charges from Transpower for transmission; charges from Unison for distribution; and charges from your electricity retailer for the electricity you use. For every $1 charged to your power account, it is roughly made up like this:
