Energy trust opposed to merger

Ruapehu Bulletin, Volume 12, Issue 571, 31 January 1995, Page 12

Energy trust opposed to merger

King Country Energy won't consider any merger or amalgamation with other power companies unless very clear advantage to the customer can be demonstrated, according to the shareholder representatives, the King Country Electric Power Trust. KCEPT chairman Ian Strachan said he endorsed comments made by King Country Energy chairman Ken Street that some of the activities taking place in the electricity industry were an "insult to customers". Mr Strachan said hostile takeover bids and multi-million dollar advertising campaigns of the industry giants would all lead to higher prices for the customers of the affected companies. "As a result of all the publicity about power company shares, King Country Energy is receiving several calls a week, mainly from holiday home owners, asking when they will be receiving their shares in King Country Energy." Mr Strachan said the shares in King Country Energy are held in trust by the King Country Electric Power trust, which has five members elected by customers. "The recent activities in Auckland and elsewhere have only served to reinforce the trustees' opinion that all King Country Energy customers will be better served by adopting a 'steady as she goes' policy and maintaining the present ownership." Mr Strachan said there was no doubt in his mind that King Country Energy would

be one of the survivors of the power industry reforms, when the present 40-plus power companies are expected to be reduced in number to between 6-10. "This can only happen while we control our own destiny." "If King Country Energy shares were to become tradeable, it is highly probable that we would be quickly taken over by one of the bigger companies, keen to increase power prices and milk our customers dry." He said King Country Energy was in good financial heart while keeping within the trust' s policy to maintain tariffs in the lower quartile of New Zealand, and trustees were in agreement with the director's policy to retain earnings at this time so that investment in further generation could be financed when a cost effective opportunity was available. "When all factors are taken into account, King Country Energy is performing as well as most of the neighbouring power companies." He described the company' s six monthly result of $744,000 profit before tax as being pleasing. It came about largely from increased generation from the company' s power stations, astute purchasing from ECNZ on the spot market, and cost control. It was also helped by more efficient use being made of both staff and equipment resources, and he complimented both the director and staff for the part each played in achieving this result.