Are New Zealand's electricity prices too high? Photo / 123rf, File
Are New Zealand's electricity prices too high? Photo / 123rf, File
EDITORIAL
Should electricity prices be next in the Government’s cross-hairs?
This week, a co-authored report from FIRST Union, the NZCTU, and 350 Aotearoa argued that, in the decade since the partial privatisation of our electricity companies, the four big generator-retailers (known as “the gentailers”) have delivered billions in excess dividendsto shareholders.
Excess dividends are payments to shareholders in excess of profits earned. The report was delivered as a smoking gun; evidence that the partial privatisation of electricity generation in 2013 has delivered great windfalls for shareholders while leaving New Zealanders out in the cold and footing the bill.
Further, the union report claims these excess profits went direct to shareholder pockets at the cost of increased renewable energy generation. All the while, it is claimed, the four large gentailers have spent the past decade “generating scarcity, prioritising dividends over struggling households and the planet”.
The report says the New Zealand Government, as the largest shareholder of three gentailers, should submit a minimum profit reinvestment target at the next shareholder meetings to rapidly develop new renewable generation and require future dividends received from its shareholding be used to buy back gentailer shares, to be held by a special purpose vehicle with the objective of maintaining stable and secure energy supply.
CTU Economist Craig Renney said “The Government has recently acted on the banking sector, and on petrol companies to ensure that they are delivering better outcomes for New Zealanders. This report demonstrates that there is a pressing need to do this for the electricity sector as well.”
Council of Trade Unions (CTU) economist Craig Renney. Photo / Mark Mitchell, File
In response, Genesis says 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.
Further, a statement from the company 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.” The company pointed out it was committed to building a 500MW grid-scale solar plant, pursuing purchase agreements to enable the construction of a wind farm in Northland running a biomass burn trial at Huntly.
Last week, New Zealand electricity - albeit low in demand during temperate weather - was 99 per cent renewable-generated.
What cannot be ignored, however, is that big dividends are being paid out while we are paying disproportionately for electricity.
One major website ranks New Zealand’s electricity prices as some of the most expensive in the world. As of March this year, the price of electricity in New Zealand was 0.181 US dollars per kWh for households; the average price of electricity in the world was 0.141 US dollars.
We are making gains in renewable generation but the cost to New Zealand households remains too high. Ten years is not too soon to review what partial privatisation has delivered to our electricity sector.
