Press Release – New Zealand Labour Party

Labour has called for the Government to stop taking massive profits from Electricity State Owned Enterprises with immediate effect. “The Government could do this today with the instant result of lower electricity prices for hardworking Kiwi families …
30 September 2009
Media Statement

Massive power company profits hurting Kiwi families

Labour has called for the Government to stop taking massive profits from Electricity State Owned Enterprises with immediate effect.

“The Government could do this today with the instant result of lower electricity prices for hardworking Kiwi families and better security of supply from renewable energy,” Labour’s Energy Spokesperson Charles Chauvel said today.

“Instead of raking in big profits and putting pressure on electricity SOEs to lift them even higher, the Government should direct them to prioritise bringing on stream new renewable electricity generation projects, and tell Transpower to speed up its grid upgrade. It should offer to take lower profits in return.”

“Meridian Energy’s financial report out yesterday highlighted a dividend payment to the Government this year of just under $300 million, which follows a $230 dividend last month from Mighty River Power.

“This comes at the same time that the Government predicts, in the Ministry of Economic Development’s New Zealand Energy Outlook to 2030, that wholesale electricity prices will rise by 40 per cent over the next 20 years.

“It also follows a Commerce Commission report earlier this year which stated that power companies had used their market power to keep prices high, and statements by government ministers that the recession was no excuse for SOEs to cut back dividends.

“Wholesale prices currently represent around a third of retail prices, so there will be strong upward pressure on retail electricity prices for the foreseeable future without an immediate change in policy settings,” Charles Chauvel said.

“The Ministry predicts that power price rises can be flattened if new renewable generation, for example from geothermal capacity, can be brought on stream in the near future.

“The obvious place to start making this happen is for the government – as shareholder – to tell Meridian and others that lower profits are acceptable provided there is ramped up reinvestment in renewable generation and in transmission.

“Labour will, the next time it is in government, ensure that electricity prices will not be forced up due to higher dividends which are not being ploughed back into plant investment, to ease the burden on Kiwi families,” Charles Chauvel said.

ENDS

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