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Hodgson urges line company rationalisation

Minister of Energy Pete Hodgson has urged small electricity line companies to give "serious consideration" to amalgamations or joint management structures to cut their costs.
"I think we still have too many very small line companies," Mr Hodgson said in a speech to an Energy Trusts of New Zealand conference and annual general meeting in Wellington today. "There are savings to be made by the joining together of smaller line companies. Joint management contracts could be one innovative way to realise those savings."
Mr Hodgson said the recent announcement by line companies Network Waitaki and Alpine Energy of a joint management company indicated the possible benefits of amalgamation.
"The main impact of the new management company will be on the management, corporate and planning staff, who will be co-ordinated in one location. The companies expect to achieve ongoing savings from this approach.
"This reinforces the comments I have just made, that economies can be achieved in the managerial area. The Waitaki and Alpine initiative certainly looks like a useful approach. It is well worth exploring by Trusts and the line companies in which Trusts have ownership interests and I encourage you to look into it."
Mr Hodgson said he was concerned with cost structures in the industry, not ownership.
"Please be clear that issues of ownership don’t concern me. Trusts own their assets and they will sell them or not sell them as they see fit. This topic is not about ownership, it’s about management."


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