Vector Limited

Vector Limited
Public (NZX: VCT)
Industry Energy
Predecessor Mercury Energy
Founded 1999; 17 years ago
Headquarters Newmarket, Auckland, New Zealand
Services Electricity distribution
Natural gas processing
Natural gas transportation
Natural gas retailing
LPG retailing
Electricity and gas metering
Revenue Increase NZ$1,252,200,000 (2013)[1]
Increase NZ$630,500,000 (2013)[1]
Profit Increase NZ$201,700,000 (2013)[1]
Website http://www.vector.co.nz/
Vector linemen working in Henderson

Vector Limited is a multi-network infrastructure company in New Zealand. It is the national number one provider of electricity distribution, number one provider of gas transmission and distribution, number one provider of electricity and gas metering, number two wholesaler of LPG and number three wholesaler of natural gas. It also owns a fibre optic cable network. In November 2015 it agreed to sell its gas business.[2]

Auckland Energy Consumer Trust owns around three quarters of its shares, and had full ownership until 2005.

History

Auckland Electric Power Board

Under the government reforms introduced by the Energy Companies Act 1992, the Auckland Electric Power Board was corporatised and became Mercury Energy Limited, a company owned by the Auckland Energy Consumer Trust (AECT).

Auckland Energy Consumer Trust

The AECT was established, along with 29 other energy trusts throughout the country, to ensure that the power lines remained in the control of electricity consumers.

The AECT retained 100% ownership of Vector until 2005, when they agreed to Vector’s initial public offering, or share float, of 24.9% of the shares in Vector, so it could raise money to buy gas company NGC Holdings. (Vector has since gone on to invest in other businesses too.) The result of this share float, and a subsequent buy back of shares in 2009, is that the AECT holds 75.4% of Vector’s shares, a controlling interest.

The AECT has had guardianship of Vector on behalf of the Auckland community only since 1993. However, the idea of community ownership of Auckland’s power network goes back much further than that. The Auckland Electric Power Board was set up in 1922 as a consumer-owned utility. (Before that, electricity distribution was looked after by local councils.) Even back then, the AEPB’s founders understood the value and importance of electricity supply to Aucklanders, and this model of guardianship of electricity distribution for the good of the entire community continues today with the AECT.

Mercury Energy Limited

When incorporated Mercury Energy Limited owned the distribution business in Auckland, Manukau and Papakura, and also retailed electricity to customers connected to the network and elsewhere. Further government reforms were introduced by the Electricity Industry Reform Act 1998. These reforms prohibited one business from being involved in distribution and generation as well as retail. So the retail business of Mercury Energy Limited was sold to Mighty River Power, a state-owned enterprise, which continued to use the name Mercury Energy.

Vector Limited

Mercury Energy Limited changed its name to Vector Limited and kept its lines business. A flotation on the local stock exchange in 2005 provided funds for further acquisitions and expansion of its fibre optics network

Subsequent acquisitions

Sale of Wellington electricity network

Vector sold its Wellington electricity network in 2008 to Cheung Kong Infrastructure Holdings Limited of Hong Kong for $785 million. The network was renamed Wellington Electricity.

NZIER report on the AECT

In 2006 the New Zealand Institute of Economic Research compared Trust ownership of Vector with four alternatives (local council ownership, management by a professional trust company, handing shares over to beneficiaries, local councils and the Auckland Regional Council, and transfer of shares to a new regional infrastructure body). On every measure, including efficiency and what was best for energy consumers in the Trust area, the NZIER concluded that the current setup is the best option.

Vector's customers hold 75.1% of its shares through the Auckland Energy Consumer Trust, and 24.9% of its shares are traded on the NZX. An annual dividend of $150–320 is paid to each customer in the Trust area. Two of Vector's directors are trustees of the Auckland Energy Consumer Trust.[3] The Trust's close relationship with the Vector board of directors has been under scrutiny by the media and the New Zealand Commerce Commission during the mid-2000s, and some have called for the trust to be disbanded, with Vector shares instead to be handed over directly to the beneficiaries of the trust.[4] The proposal however gained no general support.

Electricity distribution

Vector owns and operates the electricity sub-transmission and distribution networks across the majority of the Auckland Region, from Wellsford in the north to central Papakura in the south, and over the Tamaki Strait to Waiheke Island. The network consists of 17,631 km of lines, fifty-two percent of which is underground,[5] at voltages of 110 kV, 33 kV, 22 kV,11 kV and 400 V. Electricity is taken from Transpower's national grid at fourteen grid exit points: Wellsford, Silverdale, Albany, Wairau Road, Henderson and Hepburn Road for the northern network, and Mount Roskill, Hobson Street, Penrose, Otahuhu, Pakuranga, Mangere, Wiri, and Takanini for the southern network. Due to differing vector groups, the only distribution level connection between the northern and southern networks is via a phase-shifting transformer between Avondale zone substation (Mount Roskill) and Brickworks zone substation (Hepburn Road).

 Vector network statistics as of 31 March 2015[6]
Parameter Value
Northern
(Rodney, North Shore, Waitakere) 		Southern
(Auckland, Manukau, Papakura) 		Total
Total system length 9,052 km 9,064 km 18,116 km
110 kV 27 km 47 km 74 km
33 kV 463 km 317 km 777 km
22 kV – 172 km 172 km
11 kV 4,259 km 3,020 km 7,314 km
Low voltage (230/400 V) 4,304 km 5,509 km 9,813 km
Street lighting 165 km 236 km 400 km
Customer connections 215,543 324,996 540,539
System maximum demand 636 MW 1,122 MW 1,732 MW
System electricity delivered 2,706 GWh 5,975 GWh 8,685 GWh

In the year to 31 March 2015, the Vector distribution network had a normalised System Average Interruption Duration Index (SAIDI) of 155.3 minutes and a normalised System Average Interruption Frequency Index (SAIFI) of 1.84. This level of network reliability means that on average, each customer typically experiences a power outage of 90 minutes duration every six months.[6]

References

  1. 1 2 3 "Vector FY2013 Annual Results". Retrieved 2014-06-30.
  2. ↑ Gray, Jamie (9 November 2015). "Vector sells gas business for $952m". The New Zealand Herald. Retrieved 10 November 2015.
  3. ↑ "About us". Auckland Energy Consumer Trust. Retrieved 24 October 2015.
  4. ↑ O'Sullivan, Fran (24 December 2006). "Switch off energy trust". The New Zealand Herald. Retrieved 24 October 2015.
  5. ↑ "Energy Data File". Ministry of Economic Development. 16 July 2011.
  6. 1 2 "EDB Information Disclosure - Vector - year ending 31 March 2015" (PDF). 31 August 2015. Retrieved 2 April 2016.

Further reading

External links

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