Your locally owned network to be locally run

The Central Hawke’s Bay (CHB) Consumers Power Trust – owners of Centralines Limited – is making an application to the High Court to change the Trust Deed to enable all Trustees to be elected by you as CHB power consumers.

Currently three Trustees are appointed, one by the CHB Mayor, one by the CHB District Council and one by the major electricity users in CHB. The other four are elected by you. 

A change to 100% of Trustees being elected will entitle Centralines to apply for ‘exempt’ status under the Commerce Act, which is applied to many other provincial lines companies. This enables all decisions about how Centralines operates to be made locally and with more flexibility. It will also reduce the cost burden of regulation. While this would mean some changes to the way that Centralines operates, it won’t have any real impact on you, other than being able to elect all your Trustees in the future.

A copy of the proposed changes to the Trust Deed can be viewed via the link below. 

If you have any questions about what is being proposed by the Trust, please email [email protected] by 20 November, or visit your Trustees for a chat at CHB District Library, Waipawa:

• Thursday 5 November, 9-11am
• Tuesday 10 November, 1-3pm

Following your feedback, the Trust will make its application in late November.  

TRUST DEED:

CHANGES TO TRUST DEED APPROVED BY THE HIGH COURT 2021:

Frequently asked questions

Q: Why is the CHB Consumers Power Trust signalling its intent for Centralines to become exempt from the price quality regime administered by the Commerce Commission? 
A:  The Commission’s Default-Price-Quality (DPP) scheme is a one-size-fits-all approach which does not work well for small companies. The Trust therefore believes it is in the best interest of its consumers that price quality trade-offs are made by the representatives of Central Hawke’s Bay, rather than by the Commerce Commission. 

Being regulated also means there are high costs and risks to Centralines, with no benefit to consumers as Centralines has always acted, or sought to act, well inside the Commission’s limits.

Q: What would exemption mean for Centralines?
A: If exempt status is gained, the requirements of the DPP scheme immediately fall away. Centralines will no longer be bound to meet the specific requirements relating to how revenues are to be set – including legacy impacts of the Commission’s incentive schemes – as these are all determined as part of the default price-quality path.

The main benefits for Centralines would be:
• avoiding dramatic swings in revenues, 
• savings in compliance costs, and
• reduction in complexity for operating the business – the Commission’s incentive schemes are a one-size-fits-all approach which does not work well for small companies. 

This will ultimately improve the environment the business operates in and put Centralines in the same regulatory position as other EDBs of a similar size.

Q: How would Centralines’ business be managed if it is exempt from the Commerce Commission regulations?
A: The Trust would continue to oversee Centralines’ business through the Statement of Corporate Intent (SCI). This document would see the Trust acting as a proxy for the regulator (on behalf of consumers) to establish appropriate operating parameters for revenue and reliability performance. The SCI could shadow the default price quality path regulation.

Q: What does exemption mean for me as a CHB power consumer?
A: While there will be some changes to the ways that Centralines operates, there won’t be any real impact on you as a consumer, other than electing all your Trustees in the future.

This is because under the new Trust Deed – which entitles Centralines exempt status – all Trustees must be elected. Currently three Trustees have been appointed and four have been elected.

At a higher level, exemption would give the Trust more flexibility to respond to local needs and remove some barriers for Centralines, which may result in cost efficiencies and improved performance. 

Q: Will I still receive an annual discount on my power bill? 
A: Yes. Following exemption, we see the business continuing to run as usual.

Q: Will I still receive a dividend?
A: The Trust will continue to determine on an annual basis if a dividend will be distributed to consumers.

Q: When will the Trust apply to the Commerce Commission for exemption from the price quality regime? 
A: There are two parts to the application process. To apply for exemption, the Trust must:
• provide the Commission with a signed copy of the ‘Statutory declaration that Centralines is
‘consumer-owned’, and
• a complete copy of its current Trust Deed. 

The Trust Deed is currently being updated to reflect that 100% of Trustees will be elected by the consumers, which needs to be accepted by the High Court. As part of the acceptance process, the High Court will appoint a lawyer who will run a consultation process enabling consumers to raise issues/share their thoughts.

The application to the High Court to change the Trust Deed will be made late November. If the High Court approves the changes to the Trust Deed, The Trust will then contact the Commerce Commission to approve their application for exempt status. 

Q: When will exempt status be advised?
A: The Commission will assess the declaration and Trust Deed. If Centralines meets the consumer-owned criteria, the Commission will notify the Trust of the company’s revised status. The CHB Consumers Power Trust will make an announcement following the decision.

Q: Why is the Trust only signalling its intention to become exempt now? Why haven’t you done it sooner?
A: Centralines has previously missed out on exempt status because of the way the Trust has been structured (some elected, and some appointed Trustees). Moving to exempt would bring Centralines into the same position as the 12 other electricity distribution businesses with this status, which are businesses of a similar size.

Q: Where can I go for more information?
A: Enquiries regarding the application can be made by email to [email protected], or directly with your Trustees.

Q: Will there still be any external oversight of Centralines?
A: Yes, both the Commerce Commission and the Electricity Authority will still have oversight of Centralines’ operation.