Follow the dividends to understand why power prices keep rising

The gap between profit and price is now impossible to ignore

Contact Energy has just posted a record net profit of $423 million with operating earnings of $1.011 billion, while Mercury reported $321 million net profit and operating earnings north of $1 billion. Between just those two gentailers, that is $744 million in net profit and over $2 billion in operating earnings. Meridian and Genesis report next week, and the numbers will only get bigger.

Set that against what customers are paying. The Electricity Authority published data on 12 August 2026 showing prices rose an average of 6.8% in the first half of 2026, on top of an 8.0% rise in 2025. For customers who actually faced changes, household bills climbed 8.7% and small business bills 7.2%. The April 2026 analysis put residential prices 20% higher than two years ago, and 65% higher in real terms than when the retail market began 25 years ago.

This is a business cost story, not just a consumer one

The mainstream framing fixates on household hardship, but electricity is a core input cost for every manufacturer, food processor, cold storage operator, hospitality venue and office SME in the country. A cumulative rise above 20% in two years is a structural margin squeeze, not a rounding error, and it is one businesses cannot pass on indefinitely.

The MBIE survey to 15 May 2026 puts the national average retail price at 42.0 c/kWh. Notably, energy and other costs actually fell 0.8% in the last quarter while lines charges jumped 10.7%. Lines charges were the single biggest driver of increases, accounting for 54%.

The margin number that gives the game away

Here is the data point that cuts through the noise. For gentailers, the Authority found higher margins accounted for 16.2% of price increases. For independent retailers who do not own generation, margins made up just 7.4%. Gentailer margins are contributing to price rises at more than double the rate of retailers without generation assets. That differential is the market structure working in the owners’ favour.

Huia Burt, chief executive of Electric Kiwi, made the sharpest point about where the money comes from. The investment story is real, she said, but “the vast majority of it is still being earned by high prices on fully depreciated assets”. New build does not explain the scale of current profitability.

The investment defence has substance, and limits

The gentailers are not making things up. Contact says it has invested more than $2.4 billion in renewable generation over five years, arguing “profit enables us to continue making these long-term investments in New Zealand’s renewable energy transition.” It was also seeking $525 million from investors for new generation earlier in 2026. Bridget Abernethy, chief executive of ERGANZ, says this level of build “can only occur with stable, enduring energy policy that gives investors long-term confidence.”

But Consumer NZ chief executive Jon Duffy is blunt about the payoff: “We don’t see that new generation come online, or at least in the quantities we need to lower prices. Consumer patience is running out.” In February 2026 his organisation found 46% of New Zealanders thought gentailer profit levels were not justified.

The Crown is on both sides of the table

The uncomfortable structural fact is that three of the four dominant gentailers are majority Crown-owned. The government collects dividends from high prices while being responsible for regulating the market down. Victoria University analysis in September 2025 called this paralysis, arguing governments are trapped “by their own conflicts of interest as owner-shareholders.” Compounding the problem, NZIER found in June 2024 that current disclosure rules “cannot show whether or not gentailers are making excess profits” because there is no competitive benchmark to measure against.

The regulator is moving, slowly

The Electricity Authority has acted. It requested pricing information from all retailers with more than 1% market share, introduced Level Playing Field rules in July 2026 requiring gentailers to supply hedges even-handedly, and published retail gross margin data in March. Useful steps, but Burt argues they do not touch the underlying incentive to keep prices high.

The politics are now live. Consumer NZ says 55% of people told it energy issues would affect how they vote. For businesses watching another core cost climb while suppliers bank records, the question Duffy poses is the right one. If electricity, the fuel the whole economy runs on, keeps getting more expensive while profits keep hitting records, “there’s something fundamentally broken in the system.”

Sources

• Consumers fed up with power companies making billions as bills rise (2026-08-17)
• Data shows 6.8% increase to power bills across households and small businesses (2026-08-12)
• Questions asked about power price rises (2026-04-29)
• Latest retail gross margin data published (2026-03-30)
• Is it fair that prices rise as power companies bank profits? (2026-02-26)
• Big costs, big profits: the state of the electricity sector in 2026 (2026-02-24)
• Gentailer retail margin disclosure report (2024-06)