Timaru District Council has proposed Timaru District Holdings Limited (TDHL) sell its shareholding in Alpine Energy in pursuit of better financial returns.
TDHL, which owned shares on behalf of the council, would reinvest the proceeds into a ring-fenced, diversified fund to help source an increased dividend to be paid back to the council each year.
The proposal came as councils across New Zealand faced growing pressure from rising costs, ageing infrastructure and limits on rates increases.
In a statement, the Timaru District Council said the change would improve the group’s financial position by an average of $7 million a year while protecting the proceeds of the sale in the long term.
Alpine Energy was planning to invest nearly $400m in its network over the coming decade, which meant dividend returns were forecasted to remain very low.
Mayor Nigel Bowen said while the council’s Alpine Energy investment remained valuable, it was not generating the level of cash return needed to help reduce pressure on rates and support essential services.
Mr Bowen said, “our proposal is about protecting community wealth and significantly improving financial returns”.
“While the proposal involves selling a long-held community asset, the real question is whether this $130m investment is capable of delivering sufficient returns for the people of this district down the track.
“Alpine will continue to deliver the essential services as it always has due to the regulatory environment it operates in, whether we own shares in it or not won’t change this.
“Our responsibility is to make sure community wealth is protected, carefully managed, and working as hard as it can for both current and future ratepayers.”
The proposal would not affect the regulation of electricity prices, which were set independently and would not affect the community ownership of the Line Trust, which remained at the discretion of the consumers.
Any reinvested proceeds would be ring-fenced, independently managed and used for long-term community benefit rather than day-to-day spending.
Councillors would consider the proposal at the June 30 council meeting and the community was encouraged to provide feedback to timaru.govt.nz/ alpine on the proposal. — Allied Media
