Consumer NZ questions the fairness of rising power prices alongside substantial profits reported by power companies.
Meridian Energy announced a $226 million half-year profit on Wednesday. Previously, Mercury posted a $20 million net profit for the six months to December, while Genesis reported $95 million for its half-year period.
Despite earnings, customers are being notified via email that electricity prices will go up this year.
Half of respondents of a Consumer survey felt their most recent power bill was unfair, and 46% of New Zealanders believed gentailers’ profit levels were not justified.
A previous survey revealed that nearly one in five people reduced spending on food or essentials to cover power bills last winter, with 21% going to bed earlier to stay warm.
Chief executive Jon Duffy said consumers hear companies repeatedly claim “year after year” that profits are needed for generation investments, yet households have seen little meaningful new capacity materialise.
He explained that much of the new generation capacity is linked to commercial contracts, offering little benefit to households.
“The wholesale market is pricing in the potential dry year risk of there not being enough water in the lakes and there not being enough gas in the gas fields, and that means they have to price in their risk, which pushes prices up… I think people would have more patience if you saw a flood of renewable generation coming on to the market, but we’re just not seeing that; we’ve seen piecemeal incremental projects.”
Mike Roan, Meridian Energy’s chief executive, acknowledged that people want lower power prices.
“So do we, and we’re doing everything we can to achieve that – increasing generation supply and investing in new technology so we can offer even better offers to our customers,” he said.
“This result is going to help us deliver all that and more. When we do well, New Zealand gets the benefits. Around 80 cents of every dollar we pay in dividends goes to the government – 54 cents – or directly to Kiwis through their KiwiSaver and investment funds – 25 cents. We’re also one of New Zealand’s largest taxpayers – 27% of everything we earn is paid back as tax for the benefit of New Zealanders.”
“Any suggestion that there’s not enough generation being built is just wrong. It’s in our best interests – and everyone’s interests – to make sure New Zealand has all the power it needs and at prices that are as affordable as possible. We’re continuing to build as much as we can, as fast as we can. And we’re not alone.
“The industry is currently building at a rate that is 25% higher than at the peak of Think Big, and our development pipeline is big enough to double Meridian’s generation. We now hold 8.0 TWh of secured development options and a further 7.3 TWh of advanced prospects – more than a third of New Zealand’s current electricity demand.”
Bridget Abernethy, chief executive of the Electricity Retailers and Generators Association, acknowledged the tough times many households are facing.
She said New Zealand is experiencing a renewable energy construction surge.
“ERGANZ members have added more than $4.3 billion of investment in new wind, solar and geothermal to the renewables pipeline in the past year alone.”
Abernethy also urged anyone struggling with power bills to contact their retailer promptly, as various support options are available.