Editorial: Vector payout must be even-handed

The customers of powerlines company Vector have good reason to feel aggrieved - and to feel confused. Last November, a High Court decision seemed to bring down the curtain on long-running legal action and to guarantee that each of them would receive a Christmas windfall - a $600 dividend cheque. All it delivered, however, was disorder. Now, the chairwoman of the Auckland Energy Consumer Trust has been dumped as the trustees grapple with the formula for distributing the payout.

Such gyrations are, to a large degree, unwarranted. Circumstances suggest that it would, in fact, be difficult to sustain the former trust's policy of paying out dividends to businesses according to how much power they used, while residential customers got a flat rate. Common sense dictates that the dividend is paid evenly to households and businesses.

In the first instance, a majority of the trust were elected just three months ago on a plank pledging just that. More fundamentally, equal distribution is probably the only practical course. The $151 million payout represents dividends from 1998, 1999 and 2000 frozen by legal action from the Auckland and Manukau City Councils and Papakura District Council.

Over that period, many businesses have merged, changed hands or stopped operating. In such cases, it would be difficult to assess their power usage over the three years. Implementing the old policy would, therefore, be an intricate matter. Paying out evenly to both businesses and households is relatively straightforward. And if businesses feel that their greater contribution to Vector's profit will go unacknowledged, they might ponder the benefit of every household having an extra $600 to spend.

The distribution issue has been muddied by ancillary issues. The councils tried to persuade the High Court to cut $31 million from Vector's dividend pool on the grounds that it was capital. Justice Barry Paterson agreed that the sum was capital but found anyway that the trustees had every right to distribute it to customers. This did not satisfy the Auckland City Council's investment committee, which has recommended an appeal against the decision. Invoking the memory of the power supply catastrophe, the committee points to the need to retain money for infrastructure maintenance and improvement.

Unsurprisingly, that is an argument discounted by Vector. It says dividends are allotted to the trust for distribution only after a careful assessment of capital requirements. There is no doubt that power reliability has improved since the 1998 debacle. It is reasonable to ask, though, if short-term payout expediency is not at the expense of long-term goals - and, potentially, long-term regret. Take the undergrounding of powerlines that blight the landscape. Vector concentrates on putting lines underground on main roads, redevelopments and new subdivisions. Regrettably, it is inactive in older areas. The company would surely not be harshly criticised if it held back some of the dividend so that undergrounding could be pursued more vigorously.

It has not helped public understanding of the issues that much of the debate has been behind closed doors. Auckland City's investment committee declined to allow public scrutiny when it voted to re-engage Vector in court action. Similarly, the consumer trust denied public entry to its meeting on Wednesday night. Both seem to have forgotten that they were elected by the public to serve the public and were discussing matters of fundamental public interest. If there was an exception, it was Karen Sherry, who insisted, unsuccessfully, that the public had a moral right to attend trust meetings. Of all the trustees, she has also been most adamant that the dividend should be paid out evenly to households and businesses. It is perhaps symptomatic of the present confusion that she has also been dumped as the trust chairwoman.

It should not be too difficult to clear away the clouds. First, the Auckland City Council should accept the court's decision on the dividend payout. That does not mean, however, that vigilance over Vector's maintenance and development practices should be relaxed. Second, the trust must accept that the dividend should be distributed evenly. Practicality demands as much. So, indeed, does the interests of a public who have had their patience and reasonableness taxed to the limit.