Citipower Ltd

Descriptive Data

TypeAgencyDate Range1991-1999DescriptionIn 1990 the Nelson City Council started to examine proposals to sell or lease out its former MED which was trading as Citipower Nelson. Proposals were put forward by interested parties. Initially this involved just two parties, Marlborough Electric and Tasman Energy, two of the neighbouring Power Boards. In January 1991 a proposal was also put forward by Capital Power to lease the distribution assets of Citipower and purchase the non-distribution assets. Essentially the Nelson City Council would receive a dividend from the distribution assets plus a share of any additional profits. Capital Power would receive a premium on the investment it made in the company plus additional profit which it would share with the Nelson City Council. Capital Power was selected by the Nelson City Council as the preferred candidate, and negotiations were completed later in the year and Capital Power officially took control of Citipower on 1st of December 1991. They would have a lease of ten years to run the company. The official name of the subsidiary was Senatus Investments Ltd, though they traded as Citipower. A board of directors was set up which had two representatives from Nelson City Council, two representatives from Capital Power and one resident of Nelson picked by Capital Power. On the 8th of April 1992 Senatus Investments change their name to Citipower Ltd. As part of the lease agreement with the Nelson City Council there was a requirement that the Wellington City Council hold at least 51% of the equity share capital of Citipower. Because this lease was of considerable value to Capital Power, Capital Power was keen to ensure that the lease continued following the proposed merge with Energy Direct or if the Council was to dispose of its 51% interest in Capital Energy Ltd. So Capital Power arranged with WCC for the Council to retain a 51% interest in Citipower regardless of what happened to Capital Power. The 51% stake in Citipower Ltd was held by Capital City Investments Ltd on behalf of the Council. Citipower continued to be managed and controlled by Capital Power and then later TransAlta New Zealand and continued to be considered a subsidiary of that company. This arrangement continued till the passing of the 1998 Electricity Industry Reform Act. This required that all electricity companies split into either the electricity network business or the electricity supply business. As a result of the restructuring required by the Act the lease to Citipower could not continue. An agreement was reached on 1 April 1999 between Nelson Electricity Ltd, TransAlta Ltd and Citipower Ltd and the lease was terminated, with Nelson Electricity Ltd buying out the remaining lease time from TransAlta. Sources used: Citipower Ltd Board Papers 1991-1992 Volume 1 Capital Power file 670 000 Pt 1 Capital Power file 670 000 Pt 2 Capital Power file 670 000 Pt 18 Nelson Electricity Ltd – Financial Disclosures 2000 [from the Nelson Electricity Limited website www.nel.co.nz]

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Citipower Ltd