The report’s authors said the Government should submit a minimum profit reinvestment target at the next shareholder meetings to rapidly develop new renewable generation.
The study also called for future dividends the Government got from its own shareholdings should be used to buy back gentailer shares.
That money should held by a special purpose vehicle with the objective of maintaining stable and secure energy supply, the report added.
First Union researcher and policy analyst Edward Miller said the four largest gentailers paid out $3.7 billion more to shareholders than they earned in profits from 2014 to 2021.
“Excess dividend distribution has starved our electricity network of the investment needed to build new generating capacity, hiking prices on households in the midst of a cost of living crisis, and keeping coal and gas-powered generating assets on life support”, he said.
“In December 2020 the NZ Government declared a climate emergency, but we are yet to see the kind of urgent action required to match the scale of the threat”, said Miller.
“The Government has recently acted on the banking sector, and on petrol companies to ensure that they are delivering better outcomes for New Zealanders,” Council of Trade Unions economist Craig Renney said.
“This report demonstrates that there is a pressing need to do this for the electricity sector as well.”
The Government on Wednesday announced it was giving the Commerce Commission power to set fairer petrol and diesel prices.
Environmental group 350 Aotearoa said the Government had a crucial role to play in establishing a solution.
“We can’t expect the market to fix itself,” 350 Aotearoa executive director Alva Feldmeier said.
“The gentailers feel more accountable to their shareholders than to their consumers which is delivering neither fast emission reductions nor addressing the huge levels of power poverty in Aotearoa”.
The report, released this morning, said residential electricity prices had increased by 79 per cent but commercial rates dropped by 24 per cent in the past three decades.
A PwC report last month said many NZX-listed companies were waking up to the need to report the impact of climate change in their annual accounts, but progress was slow.
New Zealand carbon prices hit $85.40 per unit at the Government’s Emissions Trading Scheme (ETS) auction in September.
A spokesperson for Genesis challenged some of the views and analysis in the report.
“Residential electricity price increases have been below inflation for a number of years, and the proportion spent on electricity out of total average household income has decreased over the 10 years to 2019, currently representing around 1.9 per cent of average household income,” the spokesperson said.
“The renewable component of New Zealand’s electricity generation system has increased from around 72 per cent 10 years ago to around 85 per cent renewable now, and is on track to become 96-98 per cent renewable by 2030.
“This is despite uncertainty created by the Tiwai aluminium smelter’s indecision over whether it would stay or leave, suppressing long-term investment for several years,” the company added.
Genesis said in the past year it committed to build 500 MW of grid-scale solar, and to power purchase agreements enabling construction of a wind farm in Northland and development of a geothermal plant near Taupō.
“We will also be running a biomass burn trial at Huntly as we look for an alternative fuel to coal.”
The spokesperson said calculations used in the report to link dividends to Net Profit After Tax (NPAT) create a misleading impression.
“NPAT includes several non-cash items such as depreciation and revaluation of assets. These items recognise the previous investment in long-term assets and an estimate of the long-term value of these assets.
“These valuations fluctuate significantly and are outside a company’s control. They do not consider cash generation in a current year. Paying dividends as a proportion of Free Cash Flow is a more sustainable and consistent method for rewarding shareholders.”
NZME attempted to seek comment from several energy companies yesterday but they were unable to respond before deadline.
Meanwhile, the Green Party said the four big electricity companies should be required to reinvest massive profits into cutting both household bills and climate pollution.
The party’s energy and resources spokeswoman Julie Anne Genter said climate action and support for energy-poor households should be a core design feature of our electricity market.
”As today’s report shows, these design flaws have led to massive under-investment in generating capacity and low carbon technologies.
“National’s partial privatisation of the electricity market in 2014, in particular, has held back climate action, promoted fossil fuels, and left households much worse off.
“Massive electricity profits should be reinvested into renewables, action to reduce household bills, and local clean energy projects, such as shared or community energy.”
