A bolt from the blue

Daniel Hutchinson
From The Hutch

Electricity has fascinated and frightened people for thousands of years.

I think it’s got something to do with the potential energy of something you can’t see.

It’s almost magic. Not something to be trifled with but certainly something to get excited about.

This magic has become so much a part of our everyday lives that to own a slice of the action is one of the safest investments you can make.

And more than half of the people in the Tauranga and the Western Bay of Plenty do own a substantial portion of the pie, because they are customers of Trustpower. If you live in these areas and are a Trustpower customer, you benefit from the assets.

But that could all change soon with the announcement that Trustpower is reviewing its structure and is looking to exit the retail business to focus on making more magic (generation).

Tingling sensations

This would be sweet music to the likes of Benjamin Franklin, who romanticised and advanced the industry with his life’s work studying electricity in the 18th century.

He famously flew a kite into an electrical storm to prove that he could conduct electricity back into his body.

That could have gone horribly wrong, but fortunately he got little more than a tingling sensation and some sparks along the stringline.

There is not really a single inventor of electricity - it has been a source of fascination for thousands of years. As early as 2750BC the Egyptians were recording the effects of electric fish. People suffering from gout or headaches were urged to touch an electric fish as a remedy.

Easily amused

A few thousand years later, people in the Mediterranean were rubbing cats with rods of amber to produce a magnetic effect which was then used to attract lightweight objects like feathers. You had to make your own entertainment in those days but the word ‘electricity’ is actually derived from the word Elektron, which is the Greek word for amber.

There is a long list of curious people tinkering with electricity.

Alessandro Giuseppe Antonio Anastasio Volta invented the battery, Thomas Edison had his famous lightbulb moment and Michael Faraday invented the electric motor and generator in 1821.

Michael is also the reason why you don’t get fried every time you fly through an electrical storm, because airplanes are essentially encased in a Farraday cage. Cool.

As a 13-year-old, I conducted my own experiment with electricity by driving a three-wheel farm bike into an electric fence on my friend’s farm at Paengaroa.

The thing with three-wheel motorbikes is that unless you have a fair amount of weight on the front wheel, it doesn’t turn and I weighed no more than a bobby calf. Basic physics and the fence intervened and the bike and I became electrified. Fascinating.

Decision time

Which brings me seamlessly back to Trustpower, or more importantly TECT, which owns about 27 per cent of Trustpower on your behalf.

There is a fair bit of history with this too - dating back to 1992 when energy industry reforms meant the community had to decide what to do with the Tauranga Electric Power Board.

Half the proceeds were cashed up and the other half put into a trust for the benefit of local communities.

The pot of gold has grown since then, with TECT’s Trustpower shareholding and other assets now worth about $1 billion.

About $9 million is distributed as community grants each year, for important projects and another $31 million is distributed as cash payouts.

The catch is that you have to be a Tustpower customer to get your payout. As a result, 53,000 Tauranga and Western Bay power users are Trustpower customers.

Everybody else just goes with the power retailer that offers them the best deal, which presumably saves them more than they would get as a rebate.

Trustees released a statement this week that proposes simply passing the whole rebate scheme on with the sale of the business, fixed to that company for the next 30 years.

This would make the sale of the retail business a more attractive proposition for any buyer, but is not necessarily the most financially sensible thing to do for individual beneficiaries.

My lightbulb moment would be to simply cash up most of the Trustpower shares - and most of the value lies in the generation assets by the way - and put the whole lot in a diversified portfolio for the benefit of Tauranga and Western BOP people.

Then, not only do you get the benefit of a large pool of cash for distribution to individuals or the community at large, but you also get to choose the electricity retailer that gives you the best deal.

Now that’s got to make your hair stand on end.                  



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