A new report “Generating Scarcity; How the gentailers hike electricity prices and halt decarbonisation” co-authored by FIRST Union, the NZCTU and 350 AotearoaNZ argues that since the partial-privatisation of our electricity companies, the four big gentailers have delivered billions in excess dividends to shareholders and thereby starving the market of investments in renewables.
“From 2014 to 2021 these firms have collectively paid out $3.7 billion more in dividends to their shareholders than they have earned in profits, an average excess dividend of $459 million a year,” said FIRST Union Researcher and Policy Analyst Edward Miller.
“A decade of excess dividend distribution has starved our electricity network of new generating capacity, hiking prices on households in the midst of a cost of living crisis, and keeping coal and gas-powered generating assets on life support”, said Miller.
The report notes that the Government has received $3.75 billion in dividends since partial privatisation, including excess dividends of $1.35 billion over this period (averaging $150 million a year).
Executive Director of 350 Aotearoa Alva Feldmeier explained “The findings of the report reaffirm what we experts in the community energy have known for a long time; instead of embracing the benefits of renewable technologies, with lower carbon emissions, lower bills for households and more energy freedom, the gentailers are scrambling to keep the grid dirty, dumb and one-way because it protects their profits.”
CTU Economist Craig Renney said “The government has recently acted on the banking sector, and on petrol companies to ensure that they are delivering better outcomes for New Zealanders. This report demonstrates that there is a pressing need to do this for the electricity sector as well.
New Zealand now generates more electricity through coal and gas than we did in 2018. Prices for customers are rising, but new renewable electricity generation that might tackle rising bills and our climate commitments has been missing in action”.
“If the Government wants to honour its commitment to a just transition, it needs to continue to be proactive in holding companies to account”, said Renney.
Feldmeier added, “We can’t expect the market to fix itself. The gentailers feel more accountable to their shareholders than to their consumers which is delivering neither fast enough emission reductions nor addressing the huge scale of power poverty in Aotearoa”.
“We’re 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 again prevents new generation from being built. We will not see an end to this unless Government sets the right levers and uses its power as a majority shareholder in the electricity generation market.”, said Feldmeier.
The Executive Director of the climate justice organisation said, “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.”
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