An Invercargill city councillor has raised concerns about the size of pay rises being given to the directors of a council-controlled organisation when ratepayers are struggling to pay their bills.

Cr Ian Pottinger, in a report to Tuesday's full city council meeting, asks the council's holding company, Invercargill City Holdings Ltd, why directors' fees at the council-owned Electricity Invercargill Ltd have risen from $14,000 in 2007 to $22,400 in 2011.

His concerns stem from a July 10 Southland Times article revealing Social Development Ministry figures showing a significant portion of power bill price hikes for city residents arose from lines charges, Cr Pottinger says.

In the current economic climate, he expects a high level of prudent financial governance in regards to directors' pay rates.

The Electricity Invercargill Ltd website says its directors are chairman Neil Boniface, Thomas Campbell, Darren Ludlow, Philip Mulvey and Ross Smith.

Mr Boniface, a city councillor, speaking before the meeting, said the Electricity Invercargill Ltd directors' fees were decided by Holdco. Comparisons were made with other regions before the directors' fees were set and Electricity Invercargill's fees were at the lower end in the country.

Addressing Cr Pottinger's concerns about the line charge increases contributing to the electricity price hikes for city residents, Cr Boniface said Cr Pottinger was confused.

The majority of the lines business increases came from Transpower, which got the energy from the dam to the substation, not from Electricity Invercargill.

Electricity Invercargill was one of the most reliable networks in the country and its lines charges were in the lower third in the country, Cr Boniface said.

Cr Pottinger, in his report to the council, also questions why the council's holding company, Invercargill City Holdings Ltd, has appointed a fifth director to Electricity Invercargill Ltd when there had previously been four, saying this took away from the company's bottom line. And he expresses concern at the pay hikes for governance members and senior management staff on PowerNet, which is 50 per cent owned by Electricity Invercargill Ltd.

Electricity Invercargill Ltd has just over 16,900 consumers and contracts PowerNet to manage the assets on its behalf.

Holdco chairman Norman Elder said Holdco and Electricity Invercargill Ltd would provide a written response to Cr Pottinger's concerns. All of Cr Pottinger's questions had reasonable and plausible answers.

evan.harding@stl.co.nz

- © Fairfax NZ News

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