Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 

VECTOR line profits raise concern of consumers

The profit results announced yesterday by VECTOR highlight the concerns of consumers about the activities of electricity monopolies according to the Executive Director of the Major Electricity Users Group (MEUG), Mr Ralph Matthes.

The Chairman of VECTOR, Mr Wayne Brown, commented on the improved result by VECTOR where after tax profit increased from $49.2.million to $94.2 million.

Mr Matthes said VECTOR’s customers were entitled to know:

 Why they should accept Mr Brown’s statement that “left alone, we won’t be touching prices”, whereas every other business tries to be more efficient and reduce its costs instead of simply taking the attitude that unless it is forced to it won’t reduce costs and prices.

 How was the $45 million increase in profit achieved?

 What were the “unspecified one-off gains from the sale of its interests in Southdown and McLachlan geothermal plant”?

 Whether the reported 7% Return on Investment (ROI) is a fair measure of VECTOR’s performance or whether it reflects an inflated asset value and or a raft of inefficiencies and or fudged cost allocations.

 Why did VECTOR expect in the future to earn a 10% ROI, when Transpower which arguably has the same or even more risk, has a target ROI of between 6% and 7% ROI .

The only positive aspect of Mr Brown’s announcement was his acknowledgement that the $110 million tunnel from Penrose to the CBD should never have been built. We will therefore be looking to VECTOR to ensure that the cost of that poor investment decision is not included in any future Optimised Deprival Valuation (ODV) of the company – otherwise it could extract a ROI from consumers. Rather the cost should be borne by the companies shareholders.

“What yesterday’s announcement highlights is the very weak regulatory regime that companies like VECTOR currently face” stated Mr Matthes. “It is ironical that monopolies such as VECTOR can parade profit results and make claims about future profit and price levels without being answerable to the users of their networks, that is consumers and retailers.”

He said every competitive business in New Zealand has the discipline of potentially losing market share to its competitors and this keeps costs and prices honest. Line companies do not face any real disciplines and they tend only to pay lip service to the concept of information disclosure stated Mr Matthes.

The community should be aware that the performance of line owners (and their auditors) in meeting their information disclosure requirements was described as “almost without exception, highly unsatisfactory” by the Ministry of Economic Development as recently as December 1999.

Mr Matthes said that a study undertaken by MEUG also revealed serious discrepancies and inconsistencies with the way that some line companies were reporting their activities. In most cases consumers ended up paying more for their line services than they should be and any talk by the Chairman of VECTOR that its rate of return should be higher is unjustified.

All consumers were looking to the Government to ensure that the line companies were subjected to price control and that these monopolies could not simply charge what they chose. Consumers were optimistic that these forms of control would emerge from the Ministerial Inquiry into Electricity that would be reporting to Government in June.

© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Crowdsale And Crowdfunding Campaign: Help Create The Future Of Independent News

Two weeks to go! The Scoop 3.0 plan aims to create NZ’s first community-owned, distributed news and media intelligence ecosystem in 2019. We believe this ScoopPro media monetisation approach can be scaled and spread globally to support local and independent news efforts in regional New Zealand and around the world.

Scoop is an ecosystem, it would not exist without those who contribute to it, read it and rely on it for professional media purposes. Generous past support from this ecosystem has enabled us to come this far in developing our business model. Support our PledgeMe Campaign>>

 

14/11: Two Years’ Progress Since The Kaikoura Earthquake

Mayor John Leggett said it was a day for reflection, but also a time to recognise the work by many people to support progress towards recovery made across Marlborough since November 2016. More>>

ALSO:

Pike River: Mine Drift Re-Entry Plan To Proceed

“I’ve decided the Te Kāhui Whakamana Rua Tekau Mā Iwa - Pike River Recovery Agency, recommended course of action to enter the drift, using the existing access tunnel, is by far the safest option,” said Andrew Little. More>>

ALSO:

Appointments: New High Commissioner To Australia Announced

“Dame Annette King needs no introduction given her long running career as a parliamentarian where she has previously held a number senior Cabinet portfolios, including Justice, Police and Health. She also was Parliament’s longest serving female MP with 30 years’ service,” said Mr Peters. More>>

ALSO:

Two Years Since Kaikoura: Silvia Cartwright To Lead Inquiry Into EQC

“The inquiry will be the first of its kind under the Public Inquiries Act 2013 and will have all the powers of a Royal Commission, be independent of Government and make its report directly to the Governor-General. More>>

ALSO:

Gordon Campbell: On The Royal Commission Into Child Abuse

Obviously, it is good news that the coalition government has broadened the scope of its Royal Commission into the abuse of children, beyond its previous focus on children in state care. More>>

ALSO:

Cases Delayed: Court Staff Refuse To Handle Sentencing Papers

Dozens of court cases have reportedly been delayed, as court staff escalate industrial action at two Auckland courts by enforcing a ban on handling sentencing papers. More>>

ALSO:

Education: Primary Teachers Rolling Strikes

RNZ Report: More than 100,000 primary school students in Auckland will be home from school today as teachers and principals walk off the job for the second time this year. It's the start of a week of rolling one-day strikes around the country, after the collapse of contract negotiations last Thursday. More>>

ALSO:

"Process Was Sound": Inquiry Into Haumaha Appointment Released

The Inquiry’s purpose was to examine, identify, and report on the adequacy of the process that led to the appointment. It found the process was sound and no available relevant information was omitted. More>>

ALSO:

 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

InfoPages News Channels