A Question (Or Two)

20 Jun

Pioneer Generation pay no tax and that has me thinking.  I know Dean Johnston has said to me that ‘council doesn’t pay tax’.  Does that no tax arrangement go over to our power companies?  If they do pay tax.  Why?  Why not stop using ratepayer funds for grants and museums.  Have the Invercargill City Charitable Trust be the shareholders of our power companies and be exempt like Pioneer.  Our power company dividends could be paid to the trust and grants and museums etc be funded from that (being as they can be deemed ‘charitable purposes’).  The $4 million (rough guess) saved from not paying grants from the ratepayer funds covers the ‘lost’ Holdco dividend.

This assumes our power companies pay tax.  Can someone clarify?  If they do, can someone please play devil’s advocate on the idea?

UPDATE: Here is Pioneer Generation’s finances.   Read the financial notes remember.  Read in conjunction with the Income Tax Act 2007 (CW42) it is looking like we should definitely make some changes.

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6 Responses to “A Question (Or Two)”

  1. Philip T June 20, 2014 at 5:16 pm #

    You would never take a lot of notice about what Dean Johnston says. If you put together all his dumb public statements you would see a pattern of the mouth engaging before the brain. Best one ever was his statement that Kings car was covered by insurance after his opps at Elles Rd and there would be no cost to the ratepayers. I doubt there is an adult out there that doesn’t know insurance companies walk away from any claims involving drink driving. The purchase of the buildings in lower Esk would be another classic. Maybe someone know someone but the simple fact was the price paid was over double what should have been paid. Johnston again said it didn’t matter as it wasn’t ratepayer funds but money from a reserve fund. Hello anyone home in there! The many mistakes you see would never be tolerated in a normal business but councils have the wonderful luxury of unlimited time and funds and cost plus mentality.

  2. Kylie June 20, 2014 at 6:49 pm #

    So does EIL etc pay tax? I can’t see how they wouldn’t but….assume nothing eh…

  3. Alan June 20, 2014 at 7:33 pm #

    Since you asked.
    E.I.L. and The Power Company Annual Reports are available on request from PowerNet’s office on Racecourse Road.

    E.I.L. was created in 1991 from the then Municipal Electricity Department
    From the Company Profile;-

    E.I.L. owns the electricity network assets in Invercargill City and Bluff township area with
    approximately 17,200 consumers.
    and

    E.I.L. is owned by the city Council through its subsidary Invercargill City Holdings Ltd.
    Invrcargill City Holdings retains 100% ownership of the Company and receives an annual dividend from E.I.L.

    The Company provided for an increased dividend of $5.200m in 2013 $4.700m in 2012.
    Consolidated Result;-
    Opening Surplus before Tax;- $7.511m 2013 $7.190m in 2012.
    Less Taxation Expense;- ($1.669) 2013 ($1.746m) 2012.
    Net Surplus after Taxation:- $ 5.842m 2013 $5.445m 2012.

    The Power Company Ltd. (T.P.C.L.)
    Company Profile;-
    T.P.C.L. was formed in 1991 and owns the electricity network assets in the Southland/West
    Otago area,excluding Invercargill city and the Bluff township area. It has approx. 14,800 consumers.
    T.P.C.L. is owned by the consumers connected to the network. The S.E.PS.C.Trust (Southland Power Trust)exercises the ownership rights on behalf of those consumers. After, may I add, much lobbying, petitioningand protesting to the Government over a long period of time. Quite a saga in itself.
    Financial Performance;-
    Operating Surplus Before Tax;- (Exclusive of Discount) 2013 $14.720m .2012 $19,217m.
    Discount to Consumers;- 2013 ($6.952m) 2012 ($5,850m).

    Operating Surplus Before Taxation;-2013 $7.768m 2012 $13.367m
    Net Surplus After Taxation;- 2013 $5.690m 2012 $9.162m.

    • Kylie June 20, 2014 at 8:03 pm #

      I probably should have looked that up myself but THANKS Alan!So they pay about $2m in taxx….then why don’t we set up a similar arrangement as Pioneer Generation. The Central Lakes Trust finances on Charities told me that Pioneer are tax exempt.
      Maybe Mr Boniface would like to look into saving $2m a year for the ratepayers – he can even take the credit…

    • Philip.T June 21, 2014 at 11:08 am #

      So can someone tell me why the council retained ownership through Holdco. The power Company is owned by the consumers. They have one structure and dividends go directly to the consumer. Almost 6 Million last year. IEL pays its consumer dividend to Holdco, they clip the ticket and pass on what they consider is OK to the ICC who would also swallow 20% in admin costs and the rest is used to subsidise rates. So instead of the Power Companies one management structure IEL monies go through three and even then dont go to the actual consumers.
      The saddest bit is that it will never change as some very greedy people have shoe horned themselves into appointed positions and they have far to much to lose to be worrying about consumers. The fact the positions are appointed rather than elected is the core reason Invercargill is sliding backwards as they continually fail to understand or want to understand what public office is about. Representing the public.

      • Kylie June 21, 2014 at 1:26 pm #

        My thought is that the fat cats can remain in their fiefdom (for now..lol) the only change would be to replace Holdco with the Invercargill City Charitable Trust (need to check over the constitution of course or steal Central Lakes Trust deed), Directors can still be paid and the Holdco ones could get their ‘director fees’ as Trustee Remuneration. They can still suck on the tit but the tax situation changes (if I am processing this all correctly).
        Where is devils advocate Tom ? lol
        What reason could the directors and councillors have to say no if all it does is save a few million dollars a year?

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