Unions take aim at big power firms
Unions are piling pressure on the Government to reform the electricity industry, saying big power firms have starved the electricity network of investment while hiking prices and paying out $3.7 billion in ‘‘excess dividends’’ to shareholders.
A report by the Council of Trade Unions, the First Union and climate action group Aotearoa 350 called on the Government to respond by requiring big power firms to reinvest a minimum proportion of their profits in new generation and by levying a windfall tax on excess pay-outs.
Meridian, Mercury, Genesis and Contact Energy paid out $8.7b in dividends to shareholders between 2014 and 2021, which was more than the $5.35b they earned in profits over the period, their report said. The former three companies had achieved that by increasing the book value of their assets by more than $10b to reflect ‘‘high and rising electricity prices’’ while taking on extra debt, they said.
‘‘What we are seeing here is asset-stripping that delivers disproportionate benefits to a privileged few at the cost of residential consumers and global warming.
‘‘It is doubly ironic that this is possible because of the investments made over decades by the taxpayer, yet it is the poorest New Zealanders who are paying the price in higher energy prices.’’
A study funded by power companies had set out a ‘‘bold vision’’ that would see them spend just over $10b on renewable generation by 2030 with the goal of ensuring 98% of power would be generated by renewables, the report said. But what that had not mentioned was that they ‘‘appear to have also spent the last decade generating scarcity, prioritising dividends over struggling households and the planet’’, it said. The broadside comes in the wake of indications that a lobby group set up by the Government to provide a ‘‘louder voice’’ for the interests of consumers and small businesses in the sector, the Consumer Advocacy Council, is poised to press ministers to restructure the industry.
Consumer Advocacy Council chairperson Deborah Hart said on Tuesday that power prices were high, consumers were cutting back on heating and hot water and that something needed to be done. The Electricity Retailers Association, which represents the major power firms, has responded to recent criticisms of the industry by saying it did ‘‘really well on reliability, affordability and sustainability’’ compared with overseas. It has also pointed out that the Electricity Authority, the industry’s regulator, recently concluded major structural reforms were not currently justified.
The union-backed report said New Zealand was known for its relatively high proportion of renewable electricity generation.
But it said much of that rested on the ‘‘legacy of hydropower schemes’’ built between 1945 and 1970 by the state and during the past decade, generating capacity had remained roughly the same at about 10,000 megawatts.