Are the beneficiaries benefiting?

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Councilor Meredith Akuhata-Brown’s question in The Gisborne Herald this week “are the beneficiaries benefiting?” is timely. At the August meeting of Eastland Community Trust (ECT), chairman Michael Muir said beneficiaries wanting to make significant changes to the nature and scope of the trust’s activities should attempt to do so through the annual statement of intent process.

The Tairawhiti Residents Association has been working on a submission to ask for a change to the current ‘profit focused’ model of Eastland Network (ENL). Our submission demonstrates beneficiaries are being significantly overcharged by ENL. Contact suggests ENL’s network charge now represents 46 percent of a residents power bill, the third highest in the country. Our network made a huge profit last year ($13million before interest and tax) and yet they still increased their charges. Most community owned networks (72 percent) pay their profits back to their consumers. Ours only paid $3.5million back to ECT.

Power bills in NZ have increased 130 percent since 2002, this after we were told the neoliberal reforms of the 1980’s would reduce power charges. The profits and assets of our network have been used as leverage by Eastland Group (EGL) to grow their investments (they plan to spend $200million on capital expenditure over the next 5 years) while the dividend return on asset values, paid to ECT, is an unimpressive 1.6 percent. EGL is a classic case of neoliberal commerce, focused on maximizing its profit and asset values to justify its executives being paid extravagant salaries at the expense of their beneficiaries/ shareholders. As Meredith pointed out, it is blatant wealth inequality right here in Tairawhiti.

It is a sad irony that ECT funds community grants and regional development by overcharging its beneficiaries. Reducing the communities spending power is not a recipe for prosperity and it is patronizing for ECT to suggest they know how to better spend our money. They now have over $100million in an investment fund, enough to continue the community grants scheme without receiving any further network profits.

There is general agreement that new technologies are threatening the future of our network. Cheaper rooftop solar, smart meters, new batteries, electric vehicles and internet trading of energy are combining in the ‘internet of things’ to revolutionize the sector. If our network does not embrace the new opportunities and shift to a ‘social enterprise’ or ‘not for profit’ model, it will quickly become irrelevant and a burden on the remaining customers. Those who can least afford it.

There is an exciting opportunity for our region to have a network that supplies renewable energy, from lake Waikaremoana, at near zero marginal cost, encouraging many to stay connected. Our isolated rural communities could be transitioned to local generation, reducing the need for the current urban/rural subsidies. Our network could incentivize those who wish to install rooftop solar to add to the local generation capacity and security of supply.

The days of the network making exorbitant profits at our communities expense are over. Our submission contends there is no viable future for a ‘profit driven’ network model, and if we want it to have a sustainable future, the sooner we significantly reduce network charges the better.

Our new ‘not for profit’ model would embrace the principals of manaakitanga where the common good of the community will take precedence over accumulating surplus profits. As Max Harris urged us to consider, when speaking here back in August “we need the pulse of our social conscience to start beating harder again”. The coalition agreement has a review of retail electricity prices among the priority actions to be undertaken by the new Government in its first 100 days. Clearly it is time for a change.

Read our full submission here: TRA submission to GDC on Eastland Network.

 

Rick Thorpe

Chair, Tairawhiti Residents Association

 

 

 

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