TECT signals rebate is protected and a new Community Trust
Following consultation with beneficiaries, TECT will proceed with changes to Trust structure. The proposal protects the TECT rebate for 30 years and involves creating a new TECT Community Trust.
But what does the new rebate mean for consumers?
We take a deeper look at what the proposal will mean for the real purchasing power of the semi-annual rebate for TECT consumer beneficiaries. While the payment value steps up over time, the value realised for consumers perhaps isn't as lucrative as it may seem.
What TECT's decision means for beneficiaries
News out this week is that TECT has decided to push forward its proposal to the High Court to make changes to its structure, meaning there will be an ongoing rebate for 30 years as well as a new TECT Community Trust.
The proposed rebate will continue to be paid for approximately 30 years, to every existing retail customer as of 28 January 2021 who remains an electricity customer of Trustpower or a buyer of Trustpower’s Retail Business. The rebate will be $500 a year for the first ten years, will increase to $600 in 2030 and increase further to $700 in 2040, to take account of inflation. $500 was the averaged median rebate payment over the five previous years.
TECT chair Bill Holland says “We are confident that the final proposal will ensure that TECT will continue to bring long-lasting benefits to the Tauranga and Western Bay communities while future-proofing the rebate for existing beneficiaries”.
Putting these future rebates into perspective, it is worth highlighting the reduced purchasing power of the rebate over time due to inflation. Discounting with 2% annual inflation (the target midpoint for the RBNZ), as well as 4.24% (being the average annual electricity price increase from 2001-2020 - according to MBIE figures) gives the following real purchasing value in 2021 dollars:
Real purchasing power - 2.00%
Electricity purchasing power - 4.24%
This clearly shows the erosion of purchasing power over the 30 year period from both the impact of moderate inflation as well as the long term trends of residential electricity prices in NZ. This shows that $700 in 2050 won't keep the lights on for very long. What the table also shows is the steep annual rise in electricity costs over time. Power prices in NZ have continued to increase well above reported inflation rates.
Putting aside the financial aspect of the proposal, CEP commends TECT's foresight to support local projects and community outcomes which wouldn't be possible without their generous support. Can we put a price on watching our home grown talent such as Kane Williamson scoring hundreds, or Trent Boult collecting 5-fers under the state-of-the-art lights at the Bay Oval? Unlikely - but we get to enjoy these projects with the help of TECT's generous community support.
This proposal by TECT gives all the more reason for customers to review their overall home energy strategy. With the future of gas supply also looking to radically change in the future, a whole of home energy assessment is required, but needn't be overly complex. We visit what it means for assessing your electricity retailer in detail here.
What is important to note is that halving or better of your home energy bill is more affordable than ever with Solar, and doesn't cost the earth. A well considered Solar energy system offers Kiwis great financial returns on their investment.
To find out more about the TECT proposal, visit www.tect.org.nz/tect-proposal-