Guest speaker at the Campaign launch Rob Campbell: Look beyond the dividend
Electricity lines businesses are not something that readily stirs the heart to beat faster. They are taken for granted until something breaks.
We do not even directly relate to them as we see our power as being delivered to us by a “retailer” which in reality does nothing other than market itself and invoice us.
Most but not all lines businesses are owned by some form of community trust. Vector, the lines business for Tamaki Makaurau, is owned by a mix of community trust and private shareholder interests.
Entrust owns 75.1 % and so is for all practical purposes in control of the business. There is no other significant private interest as the next largest shareholders are ACC with 1.034%, ANZ on behalf of many small investors with 0.4575%, and Smartshares similarly with 0.4133%.
You do not get much more in control of a huge business like Vector than that. The business has a sharemarket value of $3.75 billion.
If Entrust was a private investor it would exercise that control even though directly it has only two directors appointed out of seven. It must keep a majority of “independents” as part of being listed on the stock exchange but they need Entrust votes to get there.
Entrust exercises an oversight on the business but its primary interest has been in the flow of dividends from it, the means by which it makes an annual cash distribution to consumers who are part of its historical rohe, not the whole of the Vector rohe.
Most of those consumers probably take the view that the business is pretty boring but they like the annual cash (or deduction from their escalating electricity bills). No one can blame them for that and if you own a business (which they do via Entrust) its reasonable to expect a dividend back. Even though that has been earned at least in part from your own monthly payments!
I want to suggest that there are two broad reasons to have a much deeper interest than that, without discarding the value of that return in any way.
Energy generation and supply is going through a revolution. Just about every part of it is being radically changed by policies in reaction to the climate crises. The business you own through Entrust is at the centre of that, facing huge risks as well as opportunities to participate in and lead change. It makes no sense for the business or its owners to be passive in this situation. No private controlling owner would do so;
Energy hardship is a reality for many in the community. The business that supplies the electricity is in a pivotal position to make a difference to those parts of the community in terms of how and for how much they are supplied. This is by no means incompatible with financial prudence, in fact it may be central to ensuring that.
There is only a limited opportunity to be part of ensuring that the “owner you own” plays its best potential role in all this. You don’t have to be rich. You don’t have to be an expert. The great thing about being the “owner of the owner” is that you can vote for the group that acts as the owner.
Not all that many do. But there are reasons from your bank balance, to your energy security, to your climate future, to do so. To be sure that your genuine interests are being reflected when Vector makes its decisions.
Don’t get me wrong. Vector is a great business. It has highly skilled and dedicated people from very highly technical to very demanding delivery roles. This is about supporting Vector to be the best it can be reacting to its challenges and opportunities.
To be community interest led.
More for You, Better for Auckland take a more activist and broad and future focused approach to this task than the incumbent team. Anyone can collect and pass on a share of dividends – a simple algorithm could do that. Support and leadership requires more than that.
At our campaign launch on 28 September we were fortunate to have Rob Campbell, Te Whatu Ora, Chancellor, AUT and Chair, Ara Ake as one of our guest speakers. Rob was also the former chair of WEL networks in the Waikato so is ideally placed to offer his personal perceptive on why the Entrust election matters.
Here is Rob’s speech in full.
