Today 350 Aotearoa, the New Zealand Council of Trade Union, and FIRST Union launched an update to the groundbreaking report; Generating Scarcity – How the gentailers hike electricity prices and halt decarbonisation. The updated report finds that in 2023, the Generator-Retailers distributed $1,108 million in dividends to shareholders – from net profit after tax of only $521 million – an excess dividend of $638 million in just one year. This means that the Generator-Retailers are giving far more money to their shareholders than they are earning in profits. These funds are partially earned through keeping power prices high, and leave little funds left for investment in renewable energy infrastructure
This blogpost is a quick summary of the report’s key messages. Interested to have a deeper dive into the report? Click here to read!
Everybody should have the right to clean, affordable electricity. For many in Aotearoa today, we know that’s not the case. 300,000 New Zealanders are living in energy hardship. Household power bills have increased by 42 percent in the last 14 years, while renewable generation has sat stubbornly at 85% since the 1970s. This is the time for investing in renewable solutions to make electricity clean and affordable for all.
This makes it extremely hard to swallow that the four big gentailers – Genesis, Mercury, Meridian, and Contact Energy – are continuing to underinvest in the renewable sector, distributing $10.8 billion in dividends to shareholders: a whopping $4.2 billion more than they earned in profits over this period. A year ago, we made this public for the world to see, but this report shows the Gentailers are continuing to operate in exactly the same way, in the midst of a climate emergency.
There is a clear connection between high profits and high fossil fuel generation. For the gentailers, keeping coal and gas as part of our energy mix is a crucial part of their business strategy to keep profits high.
By paying out excess dividends to shareholders, the gentailers ensure that there is never sufficient investment capital to expand new renewable generation. Expensive fossil-fuel inputs set the price for cheap renewable energy, keeping profits high and shareholders – including the Government – happy.
Households, small businesses and the planet pay the price for this reckless profiteering. Our communities suffer from stronger floods, droughts, polluted air, blackouts and soaring energy bills. Low socio-economic communities are disproportionately affected.
But there is hope and a way forward. As a majority shareholder of Genesis, Mercury, and Meridian, the Government remains the largest player in the electricity sector. The report includes five recommendations on how the incoming government can take concrete steps to establish a fair electricity system that ensures a stable climate and affordable electricity prices, particularly for low-income households.
We are calling on the incoming government to make five key changes:
- Set minimum profit reinvestment targets requiring gentailers to invest in new renewable generating capacity or into other activities that provide greater energy security and affordability for New Zealanders and New Zealand businesses. Targets should be determined with reference to the need for new generating capacity and the cost of financing.
- Any dividends distributed to the Government from their gentailer shareholders be used to buy back shares of the gentailers. The ownership of any gentailer shares shall be placed in a special purpose vehicle, co-governed by the relevant local Maori entity (hapū or iwi), whose objective would be “stable, sustainable, and affordable electricity”. It would submit shareholder motions at AGMs to this end, and require the companies to demonstrate publicly how this is being achieved. Becoming a signatory to the inaugural NZ Stewardship Code could further embed social and environmental objectives
- Purchase the remaining fossil fuel generating facilities across the country, ringfencing them for strictly non-commercial use to ensure national energy security as the electricity network undergoes its full decarbonisation process.
- That financing at least equivalent to the Government’s share of excess dividends distributed over the 2014 to 2023 period – $1.54 billion – be invested into household and community-owned and operated electricity generation schemes, including through the MBIE Community Renewable Energy Fund, between now and 2030 to reduce reliance on the gentailers
and support low-income households. - Levy a windfall tax against these gentailers, set against the value that has been generated through the excessive use of thermal generation. The value of that windfall tax would be used to insulate homes across Aotearoa, and to reduce emissions from industrial heat processes.
This is where you come in. We can pressure the Government by expressing our outrage, spreading the word, speaking up against injustice, and advocating for renewable and affordable electricity for all.
Together we can use this “Generating Scarcity” report to tell the incoming government that we are done with profits over people and call on them to enact meaningful change.
▶️ Send an email to incoming ministers urging them to address energy injustice in Aotearoa
🔁Share this blogpost and ask your friends and whānau to take action with you.
⤵️Download the full report