Taupō District Council investigating options to retain its TEL Fund

Taupō District Council is exploring ways of maintaining its TEL Fund for the local community in the event that it chooses, or is forced, to amalgamate with other councils.

Taupō District Mayor John Funnell says that during discussions with the community about local government reform, he and the councillors have heard concerns about safeguarding the TEL Fund for the benefit of the local community that the fund was set up to serve.

“It’s important that we maintain this fund that we have safeguarded for so long, so that it can be used for the purpose that it has always been intended for – which is to benefit the Taupō community.”

The fund originated from the sale of Council-owned Taupō Electricity Limited and Taupō Generation Limited in 1995, following the electricity sector reforms of the 1990s. The Taupō Electricity network at that time served the areas of the Taupō district that are now served by Unison Networks.

While Taupō District Council retained the Taupō Electricity sale proceeds to create the TEL Fund, in other districts equivalent or similar assets are ring-fenced for their communities in ways that will not be affected by local government reform.

For example, in Marlborough, the local community benefits from the Marlborough Electric Power Trust’s continued ownership of the local lines company on behalf of Marlborough consumers. In Taranaki, New Plymouth District Council’s Perpetual Investment Fund, sourced from the council’s sale of its shares in Powerco, is ring-fenced for the benefit of the local community by legislation.

Taupō District Council currently holds the TEL Fund to generate revenue for local community projects, with a priority on inflation-proofing the capital. At the same time, Council retention of the fund provides the Council with a high degree of fiscal flexibility and security. It is used as a direct offset to Council’s gross debt and is also available to mitigate unexpected events, such as natural disasters. The interest cost savings generated by having the TEL Fund are estimated at around $1.37 million annually.

The fund is professionally managed on behalf of Council and the community, and its current value is $86 million.

Council held a closed workshop last month to receive legal advice on how it can affirm and protect the TEL Fund for its intended purpose. There are a few different avenues that can be explored to preserve the fund, but each comes with different advantages and disadvantages, including costs. Work on the matter is continuing.

“Other communities have ring-fenced and safeguarded their equivalent assets for future generations, and it’s only fair that Taupō is allowed to do that too,” Mr Funnell says.

“Whatever approach we decide to take, we are committed to ensuring we achieve the best outcomes for the fund and support for the local community moving forward, and to ensure that the community’s views and preferences are taken into account.

“We will keep the community updated and will consult with the community if changes are required to protect the TEL Fund.”