On Friday, the Hawke’s Bay Power Consumers’ Trust heard verbal submissions on whether or not to alter the present arrangement whereby the Trust holds all shares in Unison on behalf of the community.
This might suggest the Trust plays a critical fiduciary and strategic oversight role on behalf of us Unison customers … but it doesn’t. It’s a Mickey Mouse operation shadowing a company with nearly a billion dollars in assets.
Reflecting its basic disdain of public airing of views, the Trust opened the ‘hearing’ by announcing that presenters could not introduce any new information or material that had not been in their original written submissions. No where in the Trust’s website or communications is such a ‘rule’ previewed. This is practice in the legalistic world of consent hearings and Environment Court proceedings, but totally out of place in this grassroots exercise in public engagement. Nor could presenters put questions to the Trustees … that would indeed cause cold sweats. Even the presenters’ podium was set up to face the small audience, not the Trustees.
Such was the body language of the day.
More importantly, the Trust made no arrangement to record the verbal presentations, several of which were delivered off the cuff, but with no less merit.
So, but for this BayBuzz report, no one will know, for example, that HBRC Councillor Jock Macintosh (in his personal capacity) chastised the Trust for not providing information crucial to informed decisions on the matter by members of the public — specifically, the Trust’s refusal to provide an estimated value of the Unison shares at question. As he noted, one might hold quite different views if they understood their share might be worth $10,000+ versus $240.
There’s no official record on what was presented or discussed on the day. Completely disrespectful of those taking time to present.
That’s no impediment to me, as I have this podium to air my further thoughts on the matter, as verbally presented today. Here they are.
HBPCT Verbal Submission
10 November 2023
My interest in the ownership issue has had to do with how best to ensure Unison’s resilience as a lifeline provider in the face of climate change and its associated severe weather events. A matter of risk planning and money.
That led me before and after the cyclone to look at Unison’s existing Asset Management Plan, its Risk Assessment, recent Annual Plans, etc.
I wrote about this back in March, asking:
How prepared were Unison planners?
Unison prepares comprehensive Asset Management planning documents, which include Risk Assessment. In its latest risk discussion for Hawke’s Bay, Unison focuses on potential earthquake, tsunami and volcanic ash. Listed in the ‘Other’ category are major storm events including cyclones, and flooding.
Unison notes: “…it is recognised from studies of major mishaps around the world, e.g. Three Mile Island USA, that Unison needs to protect itself from a combination of unforeseen design, operational and asset management decisions, which can combine in an obscure manner and lead to a major incident and prolonged outages.”
Reflecting this, in 2019 Unison had commissioned an independent resilience report to determine how well Unison, as a ‘Lifeline Utility’, was prepared to cope with natural disasters, such as major earthquakes and extreme weather, and significant network and system failures.
The report noted good progress with aspects of risk reduction, such as seismic strengthening and the provision of an Alternative Operations Centre in which to base a disaster recovery response. It also identified a “lack of documentation detailing network vulnerability studies that quantified the potential impact on the network of various extreme event scenarios or major asset and asset system failures.” This was signalled as the main area for improvement.
An updated Unison 2022-32 Asset Management Plan reports:
“… Unison is undertaking a Capability Project to better understand the vulnerability of its network to extreme events. The objective of this project is to develop a sustainable, network vulnerability assessment model that can be used to quantify the potential damage of various “extreme events” on Unison’s assets and asset systems and the likely consequences of this damage, focused predominantly on Unison’s ability to supply its customers. The project is progressing, and a “proof of concept”, Hawke’s Bay earthquake scenario was selected to initially develop the model’s required functionality and outputs. Once the model’s outputs have been identified and validated, additional scenarios will be incorporated.”
Unfortunately, an analysis that is a bit behind the curve. That said, might a higher probability ‘Cyclone II’ scenario provide better ‘real-world’ data for this exercise?
I noticed, for example, reference in the Asset Plan to the need for an additional sub-station in Napier CBD to provide system redundancy, a project sitting on the backburner at the time of the cyclone.
My point? I don’t think Unison and other regional planners have yet factored in the potential frequency of extreme weather events.
In the US, hurricanes each generating billions in damages and hundreds of lives lost are now annual events. The damages are escalating annually. What used to be a hurricane season affecting mainly Florida and the Gulf of Mexico states now reaches to NYC and lasts longer.
I question whether Unison is properly prepared to meet the true cost of ensuring our future power resilience. They need to pick up the pace and the spend.
So in that context, consider what PWC says in its report:
“…future growth in shareholder value may be constrained under the current ownership model. Unexpected changes to the regulatory settings or higher than anticipated demand for network or subsidiary investment are factors which could use up available borrowing headroom and create funding constraints.”
PWC is nowhere close to envisioning the full environmental threat. Or the urgency and cost of response needed. Neither are Unison officials who calmly claim, not to worry, we have plenty of access to capital for now. Headroom. As though this level of threat is decades away. Consider Wairoa’s flooding this week.
What does the Trust say about this? In its latest Annual Report: “The chance to reconfigure parts of the network for greater resilience into the future will require a lot of planning and modelling. [Brilliant insight!] Unison has demonstrated through its 10yr Asset Management Plan and Company Risk Report that they are up for the challenge.”
That’s all we get from the Trust! To me, that doesn’t sound like an informed, vigilant watchdog protecting shareholder value, let alone public safety.
For its part, Unison prefers a comatose, unchallenging shareholder. Or as they term it, a “stable shareholder”.
Nevertheless, they’ve meekly asked your permission to: “Over the next five-year period … undertake further preliminary investigative work on sensible capital structure options required to meet any future material capital needs.”
To which the Trust must respond: “Absolutely, but 5 years won’t cut it: a) the need is more urgent, given the risks ahead; and b) we have a Trust election next year and these issues should be robustly debated.”
So I’ll turn to the Trust itself, whose existence must be questioned in that investigation.
The Trust is a failure as watchdog. A failure as an educator of the public on these critical issues. A failure in terms of transparent governance – on that score I urge you to read the recent report of the Ombudsman, Open for Business, which criticises local council governance and details the steps they need to take to deliver acceptable transparency … all of which would apply to this public body. You can’t even keep power consumers’ personal information safe.
As for strategic guidance, I can’t imagine Misters Park and Hocquard go to bed at night desperate for the Trust’s advice. More likely they go to bed apprehensive of ‘what next?’from those characters.
Where is the value add?
And just a final question regarding transparency. The Trust Deed says the Trust must: “Ensure that every meeting at which submissions are heard or at which the Trustees deliberate on the proposal are open to the public.” When will you be deliberating on the ownership issue … I’d like to attend. Or have I already missed that?
[Editor: I did break the rules and put this last question to the Trustees. They seemed unaware that they might actually be required to deliberate in public. I asked to be invited. Chair Diana Kirton said she would “get back” on that. Since the official announcement of the Trust’s decision on this matter is scheduled for next Friday the 17th, surely the Trustees will be getting together sometime during the week to further confer on how to proceed.
This is exactly the type of public body decision-making that should be in th open, just as the Ombudsman has indicated. Moreover, four of the Trustees might choose to stand for re-election next year (Kirton cannot, having reached a 3-term limit). The public is especially entitled to see plainly how they get their heads around the ownership issue.]