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."
ENDS