Interview with Alan Jenkins, Executive Officer, Energy Trusts of NZ (ETNZ)

November 2017

Alan Jenkins was appointed Executive Officer of Energy Trusts of NZ (ETNZ) in 2015. He was Chief Executive of the Energy Network Association (ENA) since it was  established in 1999. Previously, he was a general manager at the Ministry of Energy, Chair of the Rural Electricity Reticulation Council, and Assistant Secretary of the oil and gas division of the Ministry of Energy. He was closely involved in the establishment of the LPG industry.

Q: What is ETNZ and what is its role in the energy sector?
A: ETNZ is the national organisation for 22 energy trusts, the principal owners of the companies that operate electricity distribution networks (EDBs or lines businesses). Member trusts have investments of nearly $6 billion in these lines companies.  
As the organisation representing consumer and community owners of EDBs, the ETNZ has both an asset owner and a consumer perspective. The majority of the trustees of these energy trusts are elected by electricity consumers who are the beneficiaries of the trusts.
The main roles of ETNZ are: monitoring new legislation, tracking changes in the industry, advising on trends, writing draft submissions, publishing a newsletter for members and overseeing member conferences two times a year.  
The most controversial role of the trusts is to approve major investment or divestment decisions from their boards. Recent investment examples include fibre communication lines, and purchase of a vineyard – any major purchases – the trusts will check it out. It’s the same with any major sale.    

Q: What are trusts responsible for?
A: The responsibilities used to be more limited. Draft legislation will, when passed, give Trusts more responsibility for gathering information and to develop tools such as their own investment strategies. At ETNZ, there is a strong awareness of energy legislation and, in particular, the need for formal arrangements within companies to get information to their trusts.  
Trustees see themselves as the consumer voice. They are consumer lobbyists. Going forward, trustees will have a different level of engagement - trusts will be better informed about health and safety, investments, and communications.  
Trust people are a strong force for positive outcomes. They redistribute a lot of knowledge.  

Q: How do trusts influence a company’s strategy?
A: Every year the trusts have to enter into a negotiation, a statement of corporate intent, setting up what they expect from the companies. Included in that is a requirement for companies to consult throughout the year. Trusts also function to appoint and remove directors.  

Q: What are the boundaries between Trusts and individual companies?
A: The companies are the doers. Trusts in general don’t see their role as doing something that would be the director’s job. For example, the boards of companies decide on pricing, sometimes within the constraints imposed by regulation.   
One exception is transmission pricing, which will impose different transmission charges on different parts of the country. There will be winners and losers all around, with the far ends of the country likely to be the losers, and lines companies having the unenviable task of passing along the charges. ETNZ has submitted a statement to the Electricity Authority to oppose price changes. Individual trusts may make a submission but generally give this type of function to the ETNZ. 

Q: What do you see as future trends for the industry?  
A: ETNZ focuses on consumer impacts because the Trusts are the people who represent the voice of the consumer.
In the future, there will be a lot more demand for electricity, with new technologies ranging from solar to EVs and battery storage. All these things are exploding on the scene right now, and it will change the dynamic of the industry. These scenarios put pricing pressure on electricity generated assets.  We believe this will happen and trying to hold back the tide is impossible.
There is no certainty about how the first technical changes will come, but the mood is that change is coming fast. We don’t want to encourage premature investment or risk just because of the media hype. On the other hand, most agree consumers have expectations to be met, are asking for more empowerment, more distancing from the old ‘top-down’ industry signals of the past.
This is the biggest challenge for most trusts - when companies come to them with proposals, the trusts do not want to invest money in things that may go away, whether these are conventional assets like poles and wires, or new high tech systems. Weighing up the relative risks around such investments, in an industry that provides an essential service, demands good information and sensible debate.