Private control of the electricity industry will significantly raise the cost of NZ’s recent commitment to triple renewable power generation by 2050, according to a new report co-authored by FIRST Union, the NZCTU and 350 Aotearoa.
The report, which updates last year’s Generating Scarcity report, argues that for every dollar the four gentailers invest in new renewable capacity, $2.41 is paid out to shareholders in dividends.
“We now have a decade of data to show us the impact of privatisation on the electricity industry.
“Despite earning $7.6 billion in net profit after tax, the industry has paid out $10.8 billion to shareholders – including excess dividends of $4.2 billion – over the decade. During this time, national generating capacity has increased by only one percent”, said FIRST Union Researcher and Policy Analyst Edward Miller.
“The Key Government’s decision to partially privatise Genesis, Mercury and Meridian has put shareholders ahead of people and planet. In 2023 alone, gentailers distributed dividends of $1.1 billion off only $521 million in net profit after tax, an excess dividend of $638 million,” said Miller.
CTU Economist and Policy Director Craig Renney said it is notable that this report follows the release of a government-commissioned report on energy hardship that suggested that 110,000 households could not afford to keep their homes adequately warm.”
“Our report suggests that consumers, including low-income households – are providing a windfall to energy company shareholders. We support the commitment to triple renewable energy production, but we need a policy framework to ensure these costs aren’t pushed onto working people while shareholders continue to make record profits”, said Renney.
Executive Director of 350 Aotearoa Alva Feldmeier says “By choosing to prioritise dividends, the gentailers have largely delayed action to lower carbon emissions, lower bills for households and support greater energy freedom. Government coffers have been filling up from gentailer dividends, earned by keeping power prices high and fossil fuels on life support. It’s climate hypocrisy, plain and simple.”
“We’ve been trapped in a toxic cycle whereby gentailers have a perverse incentive to keep fossil fuels in the grid which hikes power prices, enables them to make record profits, and distribute excess dividends which slows the development of new renewables. We will not see an end to this unless the incoming Government sets the right levers and uses its power as a majority shareholder in the electricity generation market,” said Feldmeier.
“There is large interest among communities in Aotearoa to contribute in meaningful ways to climate change mitigation. 350 Aotearoa calls for expanding public participation in the renewable energy transition and the broader functioning of the energy sector,” expands Feldmeier.