TypeAgencyDate Range1 September 1993-25 June 1996DescriptionCapital Power Ltd was formed from the Municipal Electricity Department in 1993 under the Companies Act 1955 and the Energy Companies Act 1992 and after the passing of WCC (Capital Power Establishment Plan) Empowering Act 1993.
The Energy Companies Act, which came into effect in April 1993, provided for the corporatisation of Electricity Supply Authorities and for polls of local consumers (in the case of electric power boards) and ratepayers (in the case of electricity departments) to determine appropriate share distributions. It also provided that, while electricity departments were to prepare establishment plans, ownership of their shares was to be vested in the associated territorial local authorities. In addition, the Act introduced deregulation (the removal of distributors' statutory monopolies and of the obligation to supply) of the electricity industry.
With deregulation Capital Power's franchise area was removed and electricity could be supplied to any customer within New Zealand. Until September 1993, the electricity department under the name Capital Power was operated by Wellington Electricity Management Ltd under a contract between the Council and the company. It operated as a commercial enterprise, governed by a board of directors. The company's management structure included a general manager, group managers, corporate marketing manager, domestic market manager, power projects group engineer, finance controller, and human resources manager.
Following the approval of an establishment plan under the Energy Companies Act by the Minister of Energy, and the passing of the Wellington City Council (Capital Power Establishment Plan) Empowering Act 1993, the City Council's electricity undertaking was sold to Capital Power Ltd with effect from 1 September 1993.
Ownership by Wellington City Council was through a 100%-owned council holding company (a local authority trading enterprise), Capital Holdings Ltd. It owned and monitored the Council's trading activities that had been formed into companies to ensure they operated as businesses and provided an acceptable return to the Council. Capital Holdings appointed the Board of Directors of Capital Power Ltd, whose eight directors included two Wellington City councillors. The Board oversaw the policy of the company, and that policy was then implemented by the management, headed by a general manger.
Capital Power Ltd provided electricity reticulation and network services to 85% of residents and commercial consumers in the Wellington City area generally south of Ngauranga. It also retailed energy to these consumers. It did not supply the Wellington Suburbs of Tawa, Johnsonville, Newlands and Paparangi. These came under the Hutt Valley Energy Board, which later became Energy Direct Ltd.
Two subsidiary companies were also run by Capital Power. Citipower was established to manage the electricity distribution for the Nelson City Council under a ten-year lease. NETCO (National Electricity Trading Company) was established for the distribution and marketing of electricity and related services nationwide. At the request of Wellington City Council, Capital Holdings Ltd invited offers for purchase of a minority interest in the company, providing an opportunity to "gain a partner who is able to provide technologies and capabilities for growth into new areas of endeavour in the energy industry".
In December 1994 Capital Energy Ltd was set up by the Wellington City Council and 49% of the shares were sold to TransNewZealand Ltd, which was a subsidiary of TransAlta (Canada), with the Council owning the remaining 51% of shares. Capital Energy Ltd owned Capital Holdings Ltd, which owned Capital Power Ltd and its subsidiaries. Capital Holdings Ltd did not trade and its sole activity was to own the shares in Capital Power Ltd. Capital Power Ltd and Capital Holdings Ltd had the same Board of Directors as Capital Energy Ltd.
One small problem was encountered with setting up Capital Energy Ltd and this was with 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 contract was of considerable value to Capital Power, Capital Power was keen to ensure that the lease continued following the proposed merger 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. The remaining 49% shareholding was held by Capital Power.
Citipower continued to be managed and controlled by Capital Power and continued to be considered a subsidiary of that company. In November 1995 the Boards of Energy Direct and Capital Power agreed to recommend a merger of their two companies. On June 25, 1996, Wellington City Council made a decision to sell the remaining 51% shares of Capital Energy Ltd (and therefore control of Capital Power) to TransNewZealand Ltd. The Council also formally announced its approval of the proposed merger with Energy Direct.
On the 24th of July the Energy Direct Community Trust announced its approval of the proposed merger of Capital Power and Energy Direct, so the proposal was recommended to go to the shareholders for final approval. On the 16th of September 1996 Energy Direct, Capital Power and TransAlta New Zealand shareholders voted to proceed with the merger, this was the final action required to make the merger a reality. The new company was named TransAlta New Zealand and began operating on 1st October 1996. The Wellington City Council continued to hold a 51% stake in Citipower after the sale and Citipower continued to be regarded as a subsidiary of TransAlta.
Sources: WCC Annual Reports WCC Annual Plans Capital Power Annual Reports Watts On – Capital Power Staff Newsletter Nexus – Capital Power & Energy Direct(?) Staff Newsletter Capital Power file 670 000 Pt 18
