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|Public (NZX: VCT)|
Natural gas processing
Natural gas transportation
Natural gas retailing
Electricity and gas metering
Vector Limited is a multi-network infrastructure company in New Zealand. It is the national number one provider of electricity distribution, number one provider of gas transmission and distribution, number one provider of electricity and gas metering, number two wholesaler of LPG and number three wholesaler of natural gas. It also owns a fibre optic cable network.
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2010: Vector purchased Siemens’ 50% shareholding in Advanced Metering Services Limited (AMS) and now owns a 100% shareholding in AMS.
2010: Vector acquires an additional 47,980,362 shares, through the New Zealand Windfarms rights issue, taking their shareholding up to 22.11%, from 19.99%.
2009: Vector announces the building of a 150 km fibre optic network connecting Transpower’s 14 Auckland substations.
2008: Vector sells its Wellington electricity network to Cheung Kong Infrastructure Holdings Limited for a price of $785 million, with the network renamed Wellington Electricity.
2008: Vector announces plans to extend its fibre optic network by over 300 km in Auckland with Vodafone as its flagship customer.
2007: Vector establishes a joint venture with Siemens (NZ) to deliver advanced metering technology and services throughout New Zealand.
2007: Vector acquires a 19.99% cornerstone shareholding in NZ Windfarms Limited.
2005: Vector lists on the NZSX.
2005: Vector announced its intention to list on the New Zealand Stock Exchange and to initiate a takeover of the remaining shares in NGC.
2004: Vector acquires 66.05% stake in NGC Holdings Ltd from the Australian Gas Light (AGL).
2002: Vector successfully acquired UnitedNetworks, making Vector the largest multi-utility company in New Zealand. Under the deal, Vector purchased the Auckland and Wellington lines and telecommunications networks, and the Auckland gas network.
1999: Further government reforms were introduced by the Electricity Industry Reform Act 1998. This prohibited a company from being involved in both the electricity distribution business, and the electricity generation and retail business.
1994: Under the government reforms introduced by the Energy Companies Act 1992, the Auckland Electric Power Board was corporatised and became Mercury Energy Limited, a company owned by the Auckland Energy Consumer Trust (AECT). At that time, Mercury Energy Limited owned the distribution business in Auckland, Manukau and Papakura, and also retailed electricity to customers connected to the network and elsewhere.
Auckland Energy Consumer Trust
The Auckland Energy Consumer Trust (AECT) was formed as part of reforms to the electricity industry in 1993. As part of these reforms, the Auckland Electric Power Board became a company called Mercury Energy. Along with 29 other energy trusts throughout the country, the AECT was established to ensure that the power lines remained in the control of electricity consumers. The AECT was set up on behalf of electricity consumers in the area that used to be served by the Auckland Electric Power Board. In 1998, the government made more changes to the industry, including splitting the energy sector into lines companies and retailers. This resulted in the retail business of Mercury Energy being sold to Mighty River Power (a state owned enterprise) and the lines business being retained and named Vector. In 2002, Vector acquired UnitedNetworks, the lines company operating on the North Shore and in Waitakere.
The AECT retained 100% ownership of Vector until 2005, when they agreed to Vector’s initial public offering, or share float, of 24.9% of the shares in Vector so it could raise money to buy gas company NGC Holdings. (Vector has since gone on to invest in other businesses too.) The result of this share float, and a subsequent buy back of shares in 2009, is that the AECT holds the majority of Vector’s shares, currently 75.4%. This ensures that the AECT has a controlling interest in Vector.
The AECT has only had guardianship of Vector on behalf of the Auckland community since 1993. However, the idea of community ownership of Auckland’s power network goes back much further than that. The Auckland Electric Power Board was set up in 1922 as a consumer-owned utility. (Before that, electricity distribution was looked after by local councils.) Even back then, the AEPB’s founders understood the value and importance of electricity supply to Aucklanders, and this model of guardianship of electricity distribution for the good of the entire community continues today with the AECT. To find out more about the history of the AEPB (and electricity in Auckland in general), see the book “Sign of Service: A history of the Auckland Electric Power Board” by Jennifer King, available from the Auckland Public Library.
NZIER report on the AECT
In 2006 the New Zealand Institute of Economic Research compared Trust ownership of Vector with four alternatives (local council ownership, management by a professional trust company, handing shares over to beneficiaries, local councils and the Auckland Regional Council, and transfer of shares to a new regional infrastructure body). On every measure, including efficiency and what was best for energy consumers in the Trust area, the NZIER concluded that the current setup is the best option.
Vector's customers hold 75.1% of its shares through the Auckland Energy Consumer Trust, and 24.9% of its shares are traded on the NZX. An annual dividend of $150–320 is paid to each customer in the Auckland Energy Consumer Trust area. The Trust's close relationship with the Vector board of directors has been under scrutiny by the media and the New Zealand Commerce Commission during the mid-2000s, and some have called for the trust to be disbanded, with Vector shares instead to be handed over directly to the beneficiaries of the trust. The proposal however gained no general support.
Vector owns and operates the electricity sub-transmission and distribution networks across the majority of the Auckland Region, from Wellsford in the north to central Papakura in the south, and over the Tamaki Strait to Waiheke Island. The network consists of 17,631 km of lines, fifty-two percent of which is underground, at voltages of 110 kV, 33 kV; 22 kV (all subtransmission), 11 kV and 400 V (distribution). Electricity is taken from Transpower's national grid at twelve grid exit points: Wellsford, Silverdale, Albany, Henderson, Hepburn Road, Mount Roskill, Penrose, Otahuhu, Pakuranga, Mangere, Wiri, and Takanini, with new grid exit points at Wairau Road and Hobson Street being commissioned in 2013 as part of Transpower's North Auckland and Northland grid upgrade project.