Power giants to make millions: Act

State-owned power companies will make millions in windfall profits from the emissions trading scheme, a fact the Government has hidden, Act MP John Boscawen said yesterday.

But Environment Minister Nick Smith says Act is again wildly exaggerating the impact of the scheme.

Mr Boscawen said the Government was itself presenting misleading information about the ETS by not giving New Zealanders the full picture of its financial impact.

While the Government was saying it expected to gain $350 million to $370 million from selling emissions permits to offset New Zealand's carbon liabilities, "it doesn't include the windfall gains that the Government will receive from the electricity generators".

The state-owned generator retailers, Meridian, Mighty River Power and Genesis are expected to benefit from ETS-related wholesale and retail price increases, particularly when they sell power generated from renewable sources which will not incur a carbon charge.

Mr Boscawen said the Climate Science Coalition - a lobby group which doubts man-made climate change is a threat - estimates the additional profits may be as much as $400 million a year, but he believed $150 million was a more realistic figure.

"The Government is able to charge a whole lot more money for electricity than it otherwise would be doing and we've seen that today with Mercury Energy."

Act was yesterday defending itself against Government accusations it had been drumming up support in rural areas by misrepresenting the financial impact on farmers of the emissions trading scheme, which takes effect from July 1.

Last week Agriculture Minister David Carter confirmed he'd warned MPs about Act and Federated Farmers' "concerted campaign to raise opposition to the ETS in rural communities" using estimates of the financial impact that were "at best misleading, at worst wrong".

Prime Minister John Key yesterday acknowledged there was some angst among farmers over the ETS.

"It's based more around costs than necessarily about the merits or otherwise of climate change and I think they've been fed some numbers which are just fundamentally incorrect."

Mr Boscawen rejected the Government's allegations and said Act stood by the information it used which it obtained from Meat and Wool NZ, the same source cited by the Government.

But Dr Smith said the figure quoted by Mr Boscawen was "typical of Act's approach to the ETS - wildly exaggerated".

There were a range of views as to the opportunities for renewable power generators to take advantage of high marginal wholesale prices set by coal and gas produced power generators but the most recent estimate was for gains of $30 million a year across all renewable generators.

Mr Key said Mercury's 3.3 per cent price rise, which takes effect on July 1, was an operational matter for the company. But the increase announced was less than what the Government expected would result from the ETS.

He said the important point was there would be some cost in power and fuel, but New Zealand had to play its part when it came to caring for the environment.