Why Entrust needs new Leadership
By More for You, Better for Auckland spokesperson Patrick Reynolds
This was first posted on Greater Auckland
I am part of a new team running in the Entrust election in October.
Entrust is a community electricity trust representing a significant swathe of Auckland, and set up to serve the community. It is governed by five trustees, who are elected every three years in an election the trust itself oversees.
C&R have controlled the trust for the last thirty years and have successfully reduced awareness of this community asset, running it like a private fiefdom, often chaotically, achieving very little.
Last election, turnout was only 9.5% of eligible voters. The C&R trustees insist on running a postal ballot campaign only. This alone is pretty outrageous, undemocratic, and needs to change. It also clearly shows their level of competence and the level of their commitment to the community they are supposed to be serving.
The world is also a very different place from when they took control last century: the imperatives of the electricity market, as well as generation technologies, have completely changed, but C&R have kept Entrust standing still.
What Is Entrust?
Entrust is a community trust set up to serve the community via its ownership of a historically community-built asset. It is not a commercial company with shareholders, but a community asset with the following responsibility: under the Trust Deed section 2.3 to “prefer the interests of Consumers over the interests of the Capital Beneficiaries”
Entrust owns a controlling 75.1% stake in Vector, with a current market valuation of $2.8b. This is a substantial community asset. Vector is Auckland’s lines company with the sole responsibility for the distribution of electricity in the Auckland region. It is a regulated monopoly.
Under C&R for the last 30 years, Entrust has shown no ambition to support consumers in the trust area beyond passing on the annual dividend, which has consistently declined in real terms over this period.
In our view, much more can be done by the trust for the community, especially to lower bills and increase security of supply, especially as we face accelerating disruptions. As well, much more can be done to grow the asset, for future dividends, for general community benefit, and for future generations.
For an electricity trust, the ‘interests of consumers’ are specifically in:
Lower power bills
Increased security of supply
Greater resilience during emergencies
Addressing energy poverty
Advancing decarbonisation
New technology, combined with lower costs, means there are many ways Entrust could be serving its community better while also improving its financial performance.
Vector knows this. Here is Robyn Holdaway, discussing this in 2020 as the Group Manager Public Policy at Vector, :
“There is an opportunity to increase competition and create a new downward price pressure in our electricity market by unlocking new value from the demand side of our energy supply chains. Led by UK think tank, Challenging Ideas, and supported by a global cross-sector project team including Vector, ReCosting Energy reveals new added value for EVs, batteries, and energy efficiency through a first ever comparison between demand-side actions and assets, and centralised energy generation.”
Clearly, despite Entrust’s controlling stake, there has been a lack of leadership and direction from Entrust to Vector. No sign of innovation or ambition
(Reference - a trial of solar panels on social housing, Wellington. Source: Ara Ake.)
What could be done?
The key responsibility and opportunity held by a collective customer body is to use its buying power to get the customer nearer to the centre of the equation; in this case to re-balance the energy supply chain. Over the last decade, power bills have increased on average by 3% a year, every year, and are projected to keep on increasing. And now this rate of growth is projected to accelerate, as the Commerce Commission has put out a provisional decision for future increases modelled in the red dotted line in the chart below. This is inflicting real harm on many households and businesses.
There’s a great need (and opportunity) for Auckland, the country’s biggest single market, to flex a bit of its demand-side muscle to reduce this asymmetrical pattern as much as is possible.
New technologies in distributed generation and storage offer the way to achieve this. Sparking a rollout of solar panels and batteries across the city – ideally to levels comparable to those seen overseas – is a present and proven way to counteract the gentailer oligopoly. This ‘behind the meter’ low-cost and clean supply, as it scales up, has the potential to materially improve so many key outcomes:
Additional supply to the country’s biggest electricity market at zero transmission costs
New supply not controlled and priced by the big power companies, i.e. real price competition
Local ‘behind-the-meter’ power that’s free from the risk of generation shortage or transmission outages in the national system
Cheapest available source of electricity -roof top solar does not even have land costs (unlike solar farms)
Empowerment of people, communities, and companies to participate in the new clean energy economy
Currently only 2% of Auckland’s roofs have panels. In Australia, the figure is 35%. Auckland is on the same latitude as Victoria, so is a perfectly good place for solar. Rooftop solar costs as little as 6c/kWh, compared to anything from three to six times more being currently charged by the big power companies.
Source:Rewiring Aotearoa: Electric Homes report (2023)
Fuels to Finance
“Electrification involves swapping fuels for finance” – Rewiring Aotearoa
If solar is so cheap, why aren’t more people installing it already? Because there’s an upfront cost. It’s as if you’re buying 30 years of free power upfront. Not many households can afford that, and if they need to borrow it, the interest pushes out the value further.
In Australia and elsewhere, the market system has been tweaked to make that calculation more worth it, and that opened the flood gates for solar. We are now in a world where financial structures are the key, rather than access to fuels to burn.
The More for you; better for Auckland team will lobby hard for local adoption of these small but essential changes, such as symmetrical tariffs. But there are also other more direct ways Entrust can accelerate the rollout of rooftop solar, without relying on the government or others to catch up.
1. Solar and Batteries in Homes
One model that is already in a successful trial with 150 community housing homes in Wellington, is for Entrust to finance the total solar/battery installation, and retain an interest in the system in order to pay back the investment. The household, whether renting or owned, immediately gets lower bills – and the trust gets its money back by selling excess solar power back into the grid. This can happen surprisingly fast.
In other words: lower bills for the dwelling occupants at no upfront cost, and the trust builds a new asset over time.
Done at scale, this also has the effect of restraining electricity demand growth for the whole city. This reduces upwards pressure both on prices and on the need for the nation to build ever more power stations and transmission systems elsewhere. All by adding more clean supply: win/win/win.
Source: Rewiring Aotearoa’s 2024 report Investing in Tomorrow: The Electrification Opportunity
2. Community Solar for Resilience
Another important plan is to support the rollout of solar and batteries on community centres, churches, and marae across the trust area. This would work in a similar way; lowering bills for those organisations all year, every year, and repaying the trust by trading surplus electricity to the market.
But also: because of the batteries, it means these important community centres would be able to keep running on their own systems through emergencies like floods or earthquakes. Or any event that interrupts supply from distant power stations throughout the country. We know these are places we rely on in unexpected events, and we also know we should expect increased events of this kind in the years ahead.
The cost to add a 10kW system of panels and a battery is currently around $30,000. We could supply 100 of these to community buildings for less than a third of the $10m that Entrust spends annually on undergrounding power lines on a couple of streets.
This would have more immediate impact on more people’s lives, as well as paying for itself in a relatively short period, thus freeing up that money to be invested all over again in greater community value. Again, win/ win/ win.
C3. South Auckland Commercial Powerhouse
A third, and even bigger, plan is to partner with owners of commercial buildings to build a massive ‘virtual power station’ in commercial zones: all those empty roofs you see when flying into Mangere airport in South Auckland.
Together these can support a massive South Auckland Power Station, bigger even than our biggest hydro power station deep in the South Island, or indeed the Huntly gas and coal station in the Waikato. Gigawatt scale, all with no moving parts, nor taking up any new land that isn’t already built on.
All or any of these programmes can be incrementally built up, increasing the trust’s asset base and value, employing young Aucklanders in good skilled jobs, and without years of complicated consenting delays, or leading to importing ever more fossil fuels.
Furthermore this also does help address the problem of the whole country’s reliance on hydro in a dry year. Everyday more water will be able to be retained in our dams as this growing solar supply in Auckland reduces the need to rely on it for baseload. Enabling our inherited hydro resource to operate more like a massive battery than to run constantly. Big urban solar complements our existing system extremely well.
This is a process that has already revolutionised power markets all over the world including Australia, California, Texas, and Pakistan. Currently Auckland is missing out.
Image by Kyle Paala. source: Architecture Now
New Leadership at Entrust for a Financially Smarter Future
Entrust is the right vehicle to spark this, because it is yours: it is community-owned, and on the side of the power user. The big power companies, on the other hand, are set up to grow by increasing your power bills. Over the last decade, power bills have increased on average by 3% a year, every year, and are projected to keep on increasing. That’s your power bill doubling every decade.
Only action at scale by and for power users, to push back on this big monopoly, can create a balancing force against this endless cost growth.
Additionally, this is the future – where every building is a power generator, has power storage, as well as being a power user. It is important for Auckland and Vector to get moving towards this future, or we will find our city and economy unable to compete, burdened with excessive cost.
Fossil Free Future
The financially smartest electricity system is also the cleanest; there are so many co-benefits to accelerating this transition through innovation.
Entrust is well placed to help Aucklanders unlock the great wealth prize through solar and batteries – as described so well by Dr Saul Griffiths, founder of Rewiring America and Australia, and chief advisor to Rewiring Aotearoa, in this recent interview with Jack Tame on Q&A.
How to vote
Voting papers will arrive at households in the Entrust district from October 10th. It is recommended to get completed papers in the post no later than October 21st to arrive by election day Friday 25th October.
Or there are a select number of Woolworths supermarket that apparently will have ballot boxes too.
Please take the time to check us out and vote in the Entrust election if you are eligible.
