Cautious Welcome to Central North Island Power Merger

The MP for Rotorua and Minister of Energy, Max Bradford, has cautiously welcomed the proposed merger of generation and retailing assets of three central North Island power companies, TrustPower, Powerco and CentralPower.

"The proposal is without doubt a major step in the right direction, and is in line with the Government"s electricity reforms. I welcome the intention of the proposal and congratulate the companies," Mr Bradford said.

"However, this merger isn"t quite the same as the United/Southpower/Enerco announcement where the companies have agreed to ownership separate their line network businesses before or at the same time the retail company is formed.

"The Powerco/TrustPower/CentralPower proposal is, I imagine, a step on the way to full lines and energy separation. But to meet the requirements of the Electricity Reform Bill, before the merger can be consummated, the three companies will need to make arrangements over the next few months to fully ownership separate.

"I have spoken to Mr Avon Carpenter, chair of TrustPower, and we have discussed the need to ensure the merger will be consistent with the law.

"The comments by Mr Simon Mouter, chief executive of Powerco, that the proposals will mean the death of community trust ownership in the electricity industry are mischievous. There is nothing to prevent trusts, such as the trust owning much of the company he manages, continuing to own the monopoly lines businesses in the sector. The NZIER (New Zealand Institute of Economic Research) says that is feasible and sensible.

"Certainly, my view throughout the reform process has been that community trusts are the most obvious owners of the lines. They are best placed to take the responsibility for managing lines businesses, and for meeting the socialobjectives of protecting rural and small domestic consumers by the lines tariffs they charge retail power companies competing for customers across local lines networks.

"It's all about local ownership and local accountability. The electricity reforms allow, and indeed promote that, while giving consumers choice over who sells them their power at lower prices."