Alpine Energy share sell-down pitched again for Timaru
Saturday, 12 April 2025
Six-and-a-half years after a highly controversial attempt to sell Timaru’s shares in Alpine Energy failed, councillor Stu Piddington thinks it is time to reconsider.
Piddington said the time was right for ratepayers to seriously consider selling their shareholding in the troubled lines company.
“Alpine Energy have indicated a zero return on a $139.7 million investment for three years and likely beyond that,” Piddington said.
“If the zero-return continued for five years it means the council are potentially missing out on investment income almost $28m in total, or $5.588m annually, at a 4% return.
“That makes no sense to me.”
The Timaru District Council, through its holdings company Timaru District Holdings Ltd (TDHL), holds a 47.5% stake in Alpine Energy alongside Line Trust South Canterbury (40%) and the Waimate (7.54%) and Mackenzie (4.96%) district councils.
This week the Commerce Commission confirmed Alpine Energy would not be charged for an accounting error which led to it overcharging its 33,500 customers over a period of nine years. However, it was warned and ordered to refund customers $16.9m and spend at least $1.5m on community initiatives.
Piddington said the only positive to come from what he referred to as a “simple spreadsheet error” was that the lines company would not be fined.
The $1.5m spend on initiatives to support access to electricity in the community was “still coming off their bottom line”, he said.
Looking forward, Piddington said with the rapid changes in the industry the company was no longer the “golden goose”, but rather “quite the opposite”.
“I don’t think anyone with a KiwiSaver would accept a zero return on their investment for five years, and that is effectively what is happening to council.
“Even the $1m dividend TDHL got last year was a poor, return on investment,” he said.
Alpine Energy suspended dividends to shareholders in April last year in the wake of the overcharge scandal. That had an immediate impact, with TDHL chairperson Mark Rogers warning councillors, in July, it would be “significant and material”.
Piddington said he believed there had been poor governance oversight and management of Alpine Energy for a long period.
“They also need to invest over $400m over the next 10 years, so dividends will be hard to find.”
There had been increased scrutiny of council spending in recent months, as the council looked at ways to cut costs to reduce debt and stick to budgets.
“The council has tasked the chief executive to make serious savings in an attempt to balance the books, so we as a council also need to look at our assets and see if they are performing.”
Last month, the council’s chief executive Nigel Trainor announced a proposal to cut 71 roles and create 19, in an effort to save up to $4m. That proposal was out for consultation.
Piddington said he did not want proceeds of any sale to be spent on council operating costs, but rather invested into a sensible investment portfolio.
“There are people a lot smarter than me that could come up with an operating model that saw a good return on investment.”
Acknowledging the community response to the previous sell-down attempt in 2018, Piddington said the council’s financial position had changed dramatically since then.
It was former mayor Damon Odey who put the highly-controversial idea forward last time, when he proposed selling the shares, which were then worth an estimated $110 million, to lower the council’s debt.
At the time, Odey said the plan would allow the district to realise the increased value of its shares and use them to contribute to the long-term prosperity of the district.
TDHL had a lot of money tied up in Alpine Energy which was its biggest investment, “dwarfing holdings in PrimePort and other investments”, and had “limited control over” it, he said.
He said the lines company operated in a heavily regulated market and the council/holdings company did not “have the technical knowledge and expertise to properly support” its growth prospects.
“As a council we cannot solely rely on increasing rates income to fund everything we need to do to ensure Timaru District remains a great place to live — we need to work our investments harder to get better returns.“
Odey rightly predicted that the community would be opposed to “selling off the family silver”, but said the council’s interest in Alpine Energy had been “purely financial for some time”.
Had his proposal gone ahead, the council could have made $3.52m in interest, on an annual basis, based on a 4% interest rate.
However, it did not, after more than 500 public submissions, most of which opposed the sale. The following month, Timaru District councillors voted unanimously against the proposal.
Piddington said he wanted to have the discussion again, with the “facts on the table”.
“Selling Alpine Energy would not affect the supply of electricity to customers and the return any investor can make is regulated through government. It may also be operated in a far more efficient way, in private hands.”