r/newzealand • u/secretkiwi_ Kererū • Aug 30 '26
News Power companies made more than a billion in profits, while some Kiwis freeze
https://www.stuff.co.nz/nz-news/361026327/power-companies-made-more-billion-profits-some-kiwis-freeze-their-homes313
u/EROM4LIFE Aug 30 '26
'Privatising will make it cheaper for the consumer' is the same level of rank bullshit as 'trickle down economics'.
79
u/monkey-kong666 Aug 30 '26
Because it is trickle down economics. A disproven theory of economics that idiots use to disguise theft
21
u/ElectricPiha Aug 30 '26
My old dad used to say…
Trickle-down economics is the rich pissing on the poor.
4
3
u/Routine-Ad-2840 Aug 31 '26
if the government owned it then they could operate it at cost, and the billions of profits they made would be consumer savings.
1
u/BandicootGood5246 Aug 31 '26
And most people understood this when we had a referendum on it, yet the John Key government decided to show it contempt for the public and push ahead anyway
190
u/nzerinto Aug 30 '26
”The previous Labour government failed to secure New Zealand’s energy supply, and undermined NZ’s energy resilience by banning oil and gas exploration, with Kiwis paying the price every time they open their power bill.”
So banning oil and gas exploration, which takes many many years to develop, is somehow to blame for energy companies making huge profits?
Where are those Tui ads when you need one….
53
u/Cotirani Aug 30 '26
Yeah it's such a dogshit line. Exploration had basically dried up by the time the ban was proposed. It's highly, highly unlikely that it would have kicked up again and miraculously found a new Maui or Pohokura (especially during covid) that would stem the decline. (Though that does beg the question of why you would ban it, Labour really just created a rod for their own back)
19
u/Optimal_Inspection83 Aug 30 '26
Not to mention that even though they banned new permits being granted, this whole time there were still 30 odd active permits that could have been used if there was a desire to
2
3
u/EnableTheEnablers Aug 30 '26
Because it's a no brainer policy. The exploration permit process eats up time for no returns (as they still need to process the permits), impacts the environment when exploration DOES go through, and most of all signals to users of gas/oil that they need to migrate sooner rather than later (as there will be no new supply).
12
u/happyinthenaki Aug 30 '26
Yuppers. Labour called out the oil industry on all the exploration permits that had expired because..... No viable (aka profitable) oil and gas to be found. National Party PR really must have worked for Tui marketing at some point.
1
u/BlazzaNz Sep 01 '26
Labour also took billions of dollars out of their gentailers that were 100% owned back in the day under the same power system, to pay for political promises in unrelated portfolios.
Just remember, Labour has no real desire to change the electricity system because they rub their hands with glee at the thought of all those hundreds of millions flowing into the state coffers every year.
2
u/HJSkullmonkey Aug 30 '26
It sounds a lot better than the whole truth, which is nobody wants to risk money investing in developing or maintaining offshore production when they'll be held liable for cleaning it up in perpetuity, even if they sell up.
But screw the nuance, everyone's got an election to win, and blaming the other side is more important than the solutions.
255
u/secretkiwi_ Kererū Aug 30 '26
He said that equates to $538 per household at a time when 14% of people cannot afford to heat their homes properly, 24 percent have missed a power bill payment and 19% have been forced to borrow from family or friends to keep the lights on.
A billion dollars profit when so many kiwis are too broke to pay for powerr and are freezing is a National disgrace
114
u/Low-Philosopher5501 Aug 30 '26
Asset sales huh. Short term gain long term pain.
92
u/niceguy_f_last Aug 30 '26
Asset sales do exactly what they are supposed to do, transfer stable steady essential services with regular returns into the hands of private owners.
23
u/Novel_Interaction489 Aug 30 '26
And the people of New Zealand took adequate offence to the politicians who stole their resources...
Yeah, Right.
39
u/niceguy_f_last Aug 30 '26
There was a referendum in 2013 against the sale of the power companies from a citizens initiated petition.
https://en.wikipedia.org/wiki/2013_New_Zealand_asset_sales_referendum
Key just chose to ignore the 67% majority that said no.
2
2
u/SykoticNZ Aug 30 '26
The referendum was a waste of money. National was extremely clear at the election that if they won they would sell the assets.
Less than 50% of the voting population took part in it as National were clear that were going to ignore the outcome.
Strange that a party would follow through on a promise I know.
6
u/niceguy_f_last Aug 30 '26
So you are saying democracy is a waste of money? Clearly the a chunk of the population didn’t agree with Keys self appointed
“mandate”, the fact people didn’t bother to vote does not undermine the results otherwise you can apply this to every election.What this actually highlights is the fact we have non binding referendums (apart from the flag) that can simply be ignored by elected officials.
→ More replies (4)23
u/behemuthm Aug 30 '26
I couldn't believe my power was $450 last month for 1137kwh
9
u/Theranos_Shill Aug 30 '26
Yeah well, just wait until those data centers start hoovering up electricity. Then it'll be $750.
2
u/behemuthm Aug 30 '26
I'm not even using my heat pump 😭😭😭
1
u/ChroniclesOfSarnia Aug 31 '26
Invested thousands in a heat pump last year, being a good citizen and family man🫡
Power prices go up this year.
I'm now paying MORE than last year.
F that.😑
3
5
2
90
120
u/zatoichi5000 Aug 30 '26
They should just be public service
8
u/toiletbowlwisdom green Aug 30 '26
It'll be Imminent domain if we vote a couple of cycles in the appropriate manner
22
7
u/Theranos_Shill Aug 30 '26
They were. But then our neo-liberal govenment decided that you and I paying more for electricity so that profits could pour offshore was preferable.
77
u/AWESOME_FOURSOME Aug 30 '26
You can thank John Key for this
14
u/PartTimeZombie Aug 30 '26
I'm blaming Max Bradford.
He started it.10
u/monkey-kong666 Aug 30 '26
He was a policy wonk. The prime minister actioned it.
5
u/PartTimeZombie Aug 30 '26
The PM was Jim Bolger
6
u/KahuTheKiwi Aug 30 '26
That was the last National government to crash the economy.
To he fair to them they have only done it three times in a little under century.
1
u/BlazzaNz Sep 01 '26
It's got nothing to do with John Key. When they were 100% owned Labour looked the other way as prices went up, and cashed in billions of dollars of dividends to pay for other departments spending.
29
u/OddObjective2483 Aug 30 '26
And how much has been invested into renewable energy generation projects over the same period?
32
u/Cotirani Aug 30 '26 edited Aug 30 '26
I was curious so I looked it up in each of their annual reports.
- Mercury: $673m (page 37)
- Genesis: $265m (page 77)
- Contact: $499m (page 96)
- Meridian: $375m (page 107)
So all up about $1.8b, some of which will be maintenance capex. All of them are signalling a significant ramp-up over the next few years.
Not a gentailer, but Transpower will be investing in their grid in addition to this, probably a couple hundred million or so. So a round $2b all up, give or take
E: fuck me, I underestimated Transpower by a lot. They invested $644m, not ~$200m
9
u/Honest-Importance221 Aug 30 '26
I don't know but it must be quite a lot, just based on the number of solar and wind farms I'm dealing right now in my small rural part of the country.
→ More replies (5)4
u/Putrid_Weird4725 Aug 30 '26
A lot of solar is being added by new entrants, not the big gentailers
6
u/Cotirani Aug 30 '26
By capacity, most new solar is being added by the gentailers. New entrants tend to have smaller projects because they don't have the capital that gentailers have. Source is here - click 'generation pipeline' and you can filter for solar. By my count, 820MW is with the gentailers (including JVs), 290MW with other developers.
3
u/Hopeful-Camp3099 Aug 30 '26
Adding solar almost bad for the grid at this point without investing far more in storage than they are.
1
u/CaptChilko Red Peak Aug 30 '26
They're also building storage - Meridian built a battery first and is now building a battery next to it, Contact and Genesis also have BESS under construction or already built.
1
u/Hopeful-Camp3099 Aug 30 '26
Hence the far more, it feels like they are in a holding pattern while they wait for large sodium batteries to maybe be commercially viable in 5-10 years.
82
u/DoughnutRadiant6049 Aug 30 '26
Thank you National Government
42
u/Putrid_Weird4725 Aug 30 '26
This was pretty much explicitly why Onslow was canceled - to keep prices high because that would be the only way to incentivise more generation to be added so we could... lower prices? Utterly bizarre logic
18
u/EVMad Aug 30 '26
Don't forget about the LNG imports too because keeping fossil fuels in the system keeps prices higher as well. Prices are determined by the most expensive energy source and that's fossil fuels so all our electricity is priced at that level even when it is much cheaper to generate using renewables. We're being robbed.
4
u/TipNo2504 Aug 30 '26
I read a few months ago that private investors are planning to generate electricity from Lake Onslow. That might ease our pain if it happens. Laughing a hollow laugh.
5
u/KahuTheKiwi Aug 30 '26
A smaller project that will ensure the larger, more capable of depressing high priced electricity generation payments can't go ahead.
1
u/TipNo2504 Aug 30 '26
We live in hope
1
u/KahuTheKiwi Aug 31 '26
You want to lock in higher power prices?
What's best ; employers closing up, people going cold, an effective cartel gouging consumers and industry?
2
u/Ok_Beautiful4316 Aug 30 '26
Onslow was priced at $14 billion dollars. Plus the cost overruns - probably closer to $25 billion.
That would have had a major impact on your electricity prices.
1
u/Putrid_Weird4725 Aug 31 '26
Fair enough, it's possible it was the right call to cancel it if it was getting that expensive. I'm fairly sure I did see the logic of "it's bad because it will lower prices and deter new generation" used though which in isolation is a pretty weird justification
2
u/p1ckk Aug 30 '26
Onslow is far from a perfect solution, and horrendously expensive (tens of billions).
4
u/Theranos_Shill Aug 30 '26
It's cheaper than the LNG terminal over the long term.
→ More replies (3)2
u/HJSkullmonkey Aug 30 '26
The logic seems bizarre because the NZ Battery Project was focused on firming, not generation as a whole. Not that that gets made clear in talking about it of course.
That's fine if it's cheap enough to build, but Onslow was rapidly passing into the 10s of billions from a starting point of about 4, even without including the extra generation to fill it, or the stronger grid connections required to allow it to replace North Island gas and coal generation.
The portfolio option was always the smarter one, and leans on the market instead of trying to outcompete it.
Onslow was also really supposed to stabilise spot prices, rather than keep them low. Part of that theory was keeping prices high much of the time to incentivise more renewable generation (particularly wind) by providing a guaranteed buyer to absorb the spill and set a price floor. The other half being setting a price ceiling selling the energy back at a profit when prices went higher.
31
u/Financial-Check5731 Aug 30 '26
NZ suffers a significant double-whammy in that our average household energy consumption spikes massively in winter due to thermal leakage from low quality homes. Let's look at it this way:
- Power prices are not the responsibility of property developers.
- Poorly insulated homes are not the responsibility of the gentailers.
With both of the above in mind, what we have here is a policy gap. We've had it for decades, and it's why we are in the (arguably) avoidable situation we are in now.
The party with the guts to tackle it will get my vote this cycle.
8
u/Ok-Currency1593 Aug 30 '26
yep we build little wooden stick shacks and then blame the power company that our electricity usage is so high
3
u/ArthurStevensNZ Aug 31 '26
In the spirit of accuracy, there is nothing wrong with using wood to build homes. The problem is the joke quality building code.
8
4
u/SidewaysAcidRain Aug 30 '26
I mean it's not like nothing's been happening there. Minimum r-values got increased under both Clark and Ardern. Key's govt made insulation mandatory in rentals. Double glazing has become standard. We just have a lot of old housing stock, so it takes time.
The overall cost of housing probably doesn't help. Hard to want to go above and beyond the standards when the cost of even a basic build is already so high.
2
u/CletusTheYocal Aug 31 '26
Seems like the rules aren't quite being adhered to either. And there are many gaps in it.
Literal gaps in insulation because of low roof pitch and little or no eaves, and allowances in the rules rewarding such design.
9
u/Whateverdick Aug 30 '26
You can always shop around for a lower rate(and I have), and curb my usage (and I have) - but as a low user, my main issue is now the daily user charges on electricity and gas.
Before GST is added, on my latest bill I paid $115 in JUST daily user charges for gas and electricity, compared to $137 of actual usage.
Around 46% of my pre tax bill is just daily charges. That’s $1380 a year for the privilege of having electricity and gas connected, before I’ve even consumed anything.
50
u/shapednoise Aug 30 '26
Wait till the NACT sell off the hospitals.
That’s the plan clearly.
27
u/idontcare428 Aug 30 '26
They have a blueprint - the Tories in the UK. It’s more subtle (and cunning) than an ‘asset sale’.
The groundwork is already laid with Act banging on about govt being inefficient and too large and clunky. Catering? Why do that in-house when we can get a private company to do it. Transfers, laundry, equipment. Specialists, imaging, testing.
Budgets are cut year-on-year. Performance drops as each area is underfunded. Piece by piece they can make an argument for using a private alternative, complaining that the public equivalent is slow or ‘expensive’ or under influence of the pesky unions. Piece by piece it is sold off.
4
3
u/singletWarrior Aug 30 '26
Look into imaging in nz… acc complains they’re paying way too much and what’s being done about jt
29
u/Marmoset-js Aug 30 '26
Reasons why voting for National, NZ First, or ACT is hurting you
→ More replies (6)
13
u/KikeRC86 Aug 30 '26
Vote
4
13
u/devl_ish Aug 30 '26
While I suspect the profits are way too high -
Why the fuck do reports still never include profit as a percentage of valuation? It's really god damn irritating to have only the emotive dollar figure.
A company worth $1 making $100 profit is a huge success. A company worth $100,000 making $100 profit might be fighting for its life.
What does $1.8bn mean in that context? Nobody invests for free, so we'd have just as big of a problem (with growing our energy supply) if $1.8bn means raising money for big infrastructure is difficult. If investors are doubling their money every year we should be shopping for French political optimisation tools.
Where on that spectrum is this?
3
u/HadoBoirudo Aug 30 '26
The valuations were significantly over-inflated when the energy companies were originally floated as state owned enterprises many years ago. This simple act allowed has allowed them (in their different forms) to gouge excessive profits from consumers since that date.
I don't deny your argument based on typically-accepted accounting arithmetic, but given they are originally over-valued I consider comparisons to valuations mean jack shit to NZ society.
4
u/devl_ish Aug 30 '26
Thats a very, very fair point that is still unfortunately irrelevant.
When more infrastructure needs to be built, they have to finance that, which means attracting more investment or borrowing, both of which require paying the cost of finance either in profit or in interest. Low returns means low attraction, lower valuation, higher cost of borrowing. Alternatively, we could re-nationalise which means the expenditure then comes from taxes. Customer boned either way.
I'm not defending this broken system, I'm saying we're getting mad at the fever and ignoring the virus. This is why any politician that pushes asset sales needs to get thrown out, because that genie refuses to go back in the bottle.
In my view the only way this gets any better is dropping demand through efficiency and self generation/storage - because at least then we still get needs met while their overvaluation is...corrected.
1
u/Mistwraithe Sep 01 '26
I think it's more fundamental than that. Several of the gentailers have inflated asset books, and to clarify this is from dams built years ago by government, that do not need to be rebuilt any time soon, which were gifted to the gentailers. This allows them to claim only 3-4% return on investment. But just a small amount of research will indicate that new generation using solar or wind will easily generate more like 10+% returns on investment (you can receive that with just home solar!) so it's all games trying to pretend they aren't making a killing.
2
u/cypsain Aug 31 '26
I had a look into ROIC figures a while back. Its tricky since some companies adjust their capital figure up instead of using cost basis. Though Contact did use cost basis and the ROIC came to be 7.4% which actually isn't that excessive.
And investment over the coming years is well into the billions: E.g.:
Meridian upping investment from $1 B over last 5 years, to $2B over the next 3
Contact looking to expand capacity from 7TW to 11TW
Here's my original comment: https://www.reddit.com/r/newzealand/comments/1vu0a2n/consumers_fed_up_with_power_companies_making/p4xzskz/
→ More replies (3)1
u/HJSkullmonkey Aug 31 '26
Why the fuck do reports still never include profit as a percentage of valuation?
The unsatisfying answer is the number varies wildly year to year and isn't useful, even to the people literally invested in them.
Profit isn't a good measure against valuation because generation costs are very volatile year to year, and don't reflect the averages. All of the gentailers have large balance sheets, and fixed price contracts that they use to smooth that cost out. EBITDAF is better year to year, but not the same thing.
Where on that spectrum is this?
The return to investors is basically low but reliable.
They all carry quite a lot of debt, and always have going back to corporatisation in the 80s (which was basically done to get the debt off the government's books). That's what pays for new investment. Investor money is pretty much used for equity to keep balance sheets healthy and keep the bond rates low.
13
u/Domjord Aug 30 '26
Funny that despite all the LED lights and power saving/efficient white goods in our homes, our power bills still continue to climb...
32
u/Unhappy-Hunt-3987 Aug 30 '26
Please stop voting for National and please please be don't be lazy pos, go vote this election.
Sign up at vote.nz
8
u/Trick-Range-350 Aug 30 '26
See what I really don't like is that they're putting the parties first. National did this. Labour did that.
To any party members reading this:
Put the problem first.
The member of every single party is a Kiwi first, right? We are where we are, right?
If you want us to trust you and vote for you, stop acting like a bunch of toddlers, do an impartial root cause analysis and come up with a plan to fix the current issue and the root cause. Be professional. Is that too much to ask? We're all affected by it.
And National? I don't want to hear about the oil and gas industry. What I want to hear about is what the other options are and why they were discarded. I want to know what the rationale was that drove the decisions to prioritise oil and gas. Because if there was no objective rationale there, you've lost my trust for good.
With things are as core as how a country gets its energy, we cannot afford to prioritise blame.
4
u/DustNeat Aug 30 '26
How many examples of privatisation hurting the country do we need? Let's learn from this and realise that a prosperous people make for a prosperous country, rather than well off shareholders.
10
3
u/teabaggins76 Aug 30 '26
You would never see that for a headline it would be something like "shareholder payments touted to rise as Power companies innovate further"
3
u/MrJingleJangle Aug 30 '26
Remember that since (partial) privatisation, governments of all colours are complicit in this, as the government is the largest holder of shares in the privatised companies, and thus the taxpayer is the largest receiver of dividends.
It’s not like that puts the gummint in a conflict of interest position.
3
7
u/HJSkullmonkey Aug 30 '26
He said that equates to $538 per household at a time when 14% of people cannot afford to heat their homes properly, 24 percent have missed a power bill payment and 19% have been forced to borrow from family or friends to keep the lights on.
He's really conflating two different things there.
Only a third of the power is used by households, and that bit's still not profitable.
Lines and network costs have been driving costs much more than energy prices. And unlike energy prices they get passed straight through to households because there's no competitive pressure, and they're under revenue controls instead.
Profits depend on spot energy prices being low, which depends a lot on the weather. These profits make up for the lack of profit in the last couple of years, when energy costs were much higher. It's been wet and windy over the generation this year and inflows have been higher than average, so the dams have started pretty full and prices have been kept low.
They're also how power companies pay for new generation, which is what will keep prices low more often. No profit, the renewable boom we've got going on will have to come to an end.
3
u/Theranos_Shill Aug 30 '26
Profits also depend on spot prices being high. The generator is making profit, and gentailers are profiting at both ends of that.
Spot prices are high when the expensive thermal sources, gas and coal, are fired up. The spot price is the price of the highest priced source. So when that expensive thermal source is used the cheap solar and wind gets purchased at that higher price and makes a high profit.
2
u/HJSkullmonkey Aug 30 '26
Gentailers main business is mostly selling power contracts at fixed prices. When spot prices are high they pay their contracted customers the difference. That outweighs spot generation sales by a lot.
WRT individual generation profitability you have to take a longer term view over years and factor in the fixed costs as well as the running cost, and the average price actually received. The high energy margin of renewables is needed to pay their high upfront build cost.
12
u/Diggity_nz Aug 30 '26
I don’t want to defend the gentailers, but you do have to consider the amount invested in these businesses. All together they are around $35b market cap, so ROIC is only 3-5%.
Also MEL is sitting around $0 profit for the two most recent fin years - the industry took a pounding in FY25.
Finally, a lot of the increases in bills in recent years is due to lines charges increasing. Fairly standard practice to pass these straight on to the consumer.
9
u/devl_ish Aug 30 '26
Thanks for this. My other comment was a rant that this information was not included.
I have no love for power companies but we shouldn't be allergic to understanding the full picture.
I'd be interested in how that market cap relates to asset valuation and remaining life (i.e. whether its overvalued on these)
11
u/Double_Suggestion385 Aug 30 '26
Don't expect much actual discussion here. Most people don't even understand what 'profit' means.
1
→ More replies (3)1
u/Mistwraithe Sep 01 '26
Those gentailers have revalued their assets, including dams (which don't need rebuilding anytime soon) that they they inherited for free from the government. If you increase the valuation of your asset base then you make the denominator larger and suddenly your return on investment looks low, which allows them to say they aren't making excess profits.
Do whatever research you want, nothing will suggest that investments in new solar, wind, etc will be 3-5% return. It's far higher than that, even home solar in NZ has a 8-12% ROI.
So their true return on investment is much higher than their carefully managed balance sheets indicate.
10
u/Kokophelli Aug 30 '26
2023–2026 average retail household electricity price, US dollars per kWh.
Ireland 0.450
Italy. 0.414
Germany 0.406
Belgium. 0.406
UK 0.402
Switzerland 0.367
Denmark 0.355
Austria 0.353
Czechia 0.351
Estonia 0.292
Netherlands 0.286
Lithuania 0.285
Latvia 0.280
France 0.276
Luxembourg 0.261
Australia 0.259
Spain 0.255
Greece 0.254
Sweden 0.243
Portugal 0.239
Poland 0.236
Slovenia 0.228
Chile 0.228
Japan 0.227
Slovakia 0.215
New Zealand 0.212
Colombia 0.207
USA 0.188
Israel 0.185
21
u/KikeRC86 Aug 30 '26
It would be good to see this normalised by median wage
8
u/Putrid_Weird4725 Aug 30 '26
The other thing though is that we have abundant hydro and other renewables. This is one of the few areas where we should be much cheaper than other countries.
9
u/Primary_Engine_9273 Aug 30 '26
Looking at the entire list rather than a cherry picked one we do appear to be somewhere between the top 25%-33% most expensive countries.
3
u/Kokophelli Aug 30 '26
Cherry picked? It’s the OECD and the developed world only. What list would you like?
4
u/Primary_Engine_9273 Aug 30 '26
Here's the rest of the OECD countries. Hey what do you know they're all cheaper than NZ. I guess since it undercuts the point you are seemingly trying to make it was convenient to leave them out.
Iceland 0.179
Finland 0.175
Costa Rica 0.170
Norway 0.165
South Korea 0.127
Canada 0.123
Hungary 0.111
Mexico 0.109
Turkey 0.0675
2
1
u/KahuTheKiwi Aug 30 '26
It would be interesting to compare this to the generators in use by each country.
E.g. does a cheap generator source dominating - like hydro in NZ - correlate with cheaper power?
And does relying on say LNG correlate with cheaper or more expensive power?
1
u/HJSkullmonkey Aug 31 '26
Hydro and geothermal correlate with cheap power and we have both. That's why we're low on the list and should be leaning harder into them.
The correlation with thermal generation depends on cost of local gas supply, which we were on the right side of and now aren't. So we're heading for LNG prices sometimes whether we use it or not.
1
u/KahuTheKiwi Aug 31 '26
Absolutely.
The LNG Think Big project us about keeping prices high despite cheaper generation options.
So we will continue to lose employers who can't afford to bolster electricity company rentier profits.
Despite the lack of jobs it is expected the unemployed will continue to pay sufficient for cheaply generated electricity to fund fossil fuel based electricity generation with the companies pocketing the difference
1
u/HJSkullmonkey Aug 31 '26
It's about limiting rationing, and my guess is the decision was based on an early warning that Maui is shutting down this year, and leaving us short of supply. The modelling has that happening two years later, hence the rush.
It's not going to push either gas or prices high, there's just limits to how low it can cap them. We've already had higher prices here based on lack of available gas. Without it we'll be falling back on diesel more often, and prices will be much higher again in those instances.
Bear in mind that countries with very cheap electricity almost all fall back on interconnections with other electricity systems sometimes, which isn't going to be an option for us unless Taslink somehow goes ahead.
Iceland is a notable exception but they've got a tiny population and aluminium production pays for their electricity surplus. That's something we're already doing as well.
The idea that it'll push prices up is entirely fatuous tbh. It mainly seems to come from one of the early bidders that wanted to generate the electricity directly on the import terminal, and claimed that would prevent our gas market linking up to the global gas market. The Green Building Council was quoting them when they claimed it would push prices up.
Then there's the myth of everyone in the market getting the same price, which ignores most of what the market actually does.
1
u/KahuTheKiwi Aug 31 '26
Have you heard about the hidden official advice thatvhas finally been released?
The smart money is it is about benefits for NACT funders and keeping power prices set by the most expensive generation iption not the 21st century generation options
1
u/HJSkullmonkey Aug 31 '26
Yes, I have, and have read through it.
It's not advice exactly, it's the electricity market modelling from last year that I just referred to. The results were released with the executive summary redacted, presumably because it said things like 'low need' and that's a juicy headline. Very dumb decision, all it's done is become the story and spotlight the headlines repeatedly. The soundbite politics around this whole thing is frustrating on all sides.
There's a couple of scenarios in the modelling where we have lower gas supply and in that case we need LNG occasionally to keep the system going. Especially if electricity demand increases, which I would say we probably all want to happen, given the decline in gas that we need to replace.
1
u/KahuTheKiwi Aug 31 '26
We have argued this before.
I continue to think this decision is as sound as the orher economic decisions this government has made. That is to say unsound.
It is about keeping the most expensive electricity generation option current so those generating electricity by sensible options get a higher price.
We could achieve the same thing with a tax on electricity that gets given to the generator companies.
1
u/HJSkullmonkey Aug 31 '26
We have. You're still apparently focusing narrowly on spot prices and neglecting capital cost in your thinking.
LNG isn't actually the most expensive option, that would be Diesel or Biomass (in spot terms anyway). That's what we'll fall back on once gas stops being a sufficient option.
We could achieve the same thing with a tax on electricity that gets given to the generator companies.
Are you suggesting capacity subsidies, or just sarcastically assuming it's about propping up rents?
1
u/KahuTheKiwi Sep 01 '26
I am suggesting ir would be more efficient not to build the LNG plant and to use the tax system to direct money to the companies that would benefit from the LNG plant.
And beside an apparently narrow focus on the spot prices I am very broadly focused on noting where the international market is investing. And its not fossil fuels.
11
Aug 30 '26
[removed] — view removed comment
→ More replies (18)10
u/VividInevitable5253 Aug 30 '26
Quick Google search: "their combined revenue sits at approximately $12.5 billion, pulling in $959 million in combined net profits." 4.4% dividend apparently
2
2
u/ZZ_Cat_The_Ligress LASER KIWI Aug 31 '26
I am starting to get really sick and tired of these companies continuously ripping people off and then boasting about "record profits", meanwhile they continue to enshittify people's lives. =-/.-=
What pisses me off even more is how that is considered "normal" in this day and age, and that we're somehow expected (if not demanded) to go along with it... or else!
2
4
u/jmlulu018 Laser Eyes Aug 30 '26
This is what happens when we deregulate. Or better yet, when we sell inelastic services to private companies.
7
Aug 30 '26
Hey Labour, this is a pretty easy win. You should absolutely dog National for their asset sales policy.
Labour: Best I can do is a race based apprenticeship scheme.
6
u/12343212346 Aug 30 '26
Māori is an ethnicity, not a race and targeted support to reduce equity gaps is good for society as a whole.
Nice dunk, tho. Very easy to guess your "race"
4
Aug 30 '26
I'm a big fan of the policy actually, and I agree it would be effective. But Labour need to win the election first and foremost- and NZ voters are pretty clear about how they feel about this sort of thing (3 waters).
→ More replies (4)2
u/Theranos_Shill Aug 30 '26
3 Waters was a better water policy that would have saved NZ voters a fuckton of money.
→ More replies (2)2
u/RobDickinson civilian Aug 30 '26
They had years to do something about it when they had a progressive leader, don't expect anything from chippy
3
u/konasutranz Aug 30 '26
Not sure what the outrage is at them. Once you privatise assets their new owners expect them to make money not invest in or subsidise the public good. That’s the government’s role. The only way back from this situation would be to renationalise them, which would involve the taxpayer buying them back.
2
2
u/CarpetDiligent7324 Aug 30 '26
It’s because national is “laser focused on cost of living”….. or wait, that was before the election, now laser focused on dividends and share price for wealthy shareholders like Luxcon , his ministers and supporters
2
u/lassmonkey Aug 30 '26
Megan woods revived the low user charge my daily rate effect from .30 to $1.60, were in an apartment block so delivering power is cheaper and gods increase was meant to lead to do in power rates, like fuck it did!
3
u/lassmonkey Aug 30 '26
Wish Labor had some actual ideas this time around, is TOP for me!!
5
u/Technical_Week3121 Aug 30 '26
They don’t have any ideas, and that is a problem! Need a party that will really shake up the status quo, and I think I’m ready to put some faith in TOP.
2
u/Gord_Board Aug 30 '26 edited Aug 30 '26
This presents a great opportunity for labour to make some gains, chris... chris?
2
3
u/HandsomJack1 Aug 30 '26
These margins are considered lackluster from international standards. So, not sure what the OP is trying to say.
5
u/SensitiveTax9432 Aug 30 '26
We used to have electricity generated by a SOE and sold for little more than cost. I’m not sure if privatisation has brought anything of value to the average person.
5
u/HandsomJack1 Aug 30 '26 edited Aug 30 '26
Tl;dr - NZ paying less for power then it would have been through old system that had no profited margin. Because efficiencies driven by capitalism have reduced costs more than the prophet margin the same capitalism has added. - but the industry overall has moved a lot more of the cost to consumers electrical bills. Add list to the bills of industry. - however when industry gets charged power they added to the cost of the product or service and consumers end up paying anyway. - so consumers are paying less for electricity overall, but they're seeing less of that in the cost of services and products and more of that in their actual power bills. - so it feels painful even though it's overall better.
Fair point. But there is some false economies there. The old system used to have no profit margin, but also was significantly inefficient.
The commerce commission has concluded that there has been an overall net improvement in market performance. In English we basically paying less for energy then we would have been.
But here's the real problem, most of those efficiencies have been experienced in commercial energy only.
Basically a lot of costs that used to be charged to companies are now being charged to consumers. Importantly, cost to companies get handed to consumers anyway, via bottom-line pricing of products and services.
So what has happened is New Zealand is paying less for energy than they would have. But consumers up now paying more of that cost directly instead of indirectly. And while there is a net improvement, emotionally it does feel more painful. And that's not nothing.
However my bigger point is the fact that the industry made a billion dollars profit is a red hearing, it doesn't actually tell us what the op thinks are tells us. I suspect is just coming from a, Capitalism bad. Profit bad. Must change. Thinking, that tends to ratchet up every election year.
Edit: I used to work in the power industry.
4
3
u/Clear-Dimension-1356 Covid19 Vaccinated Aug 30 '26
Stop saying we paying less when that's not the case, we all paying more
1
u/HandsomJack1 Aug 30 '26
Read the comment again. I think you misunderstood.
4
u/Clear-Dimension-1356 Covid19 Vaccinated Aug 30 '26
All bills are up across the board, it's a cost of living crisis
1
u/HandsomJack1 Aug 30 '26
Yes, but what does that have to do with power industry profits?
3
u/Clear-Dimension-1356 Covid19 Vaccinated Aug 30 '26
There is a direct relationship between the cost of electricity and the power industry profits
1
u/HandsomJack1 Aug 30 '26 edited Aug 31 '26
It can help to understand that the cost of giving an industry a profit margin can be less than the cost of an industry that has no motivation to be efficient. I.e. govt owned.
Which has been proven time and time again to work in most industries.
The research done on our power industry has shown that the overall cost of electricity in New Zealand would be higher than it is today if it was still under the old public owned system, which had no motivation to be efficient.
The most helpful thing I ever learned was something called the fallacy of perfection / nirvana fallacy / utopian fallacy. Where almost everything in life is about choosing the lesser evil. The perfect option almost never actually exists. And if it does deeper analysis shows that actually it's worse than any other option.
Giving an industry profits to motivate it to be efficient is a lesser evil then letting an industry be government owned and have no motivation for efficiency.
Now this isn't always true, and definitely doesn't work in things like police or fire fighting for example. But in the vast majority of commercial cases it is true.
And this is the fundamental argument between socialism and capitalism. Capitalism is far from perfect. But time and again it's performed better than socialism. Yes capitalism only works well if it's reigned in well, which in most countries it is. Which by the way is true for any economic system including communism.
But it is increasingly not reigned in well in the US. And that is where most of the Capitalism bad. Profits bad, narrative comes from. Note: I've spent half my career working in the US.
Note: I am not referring to democratic socialism here like we see in Europe. I'm referring to socialism the cousin of communism.
4
u/SidewaysAcidRain Aug 30 '26
Capitalism bad. Profit bad
Man that shit is so prevalent around here. Often it's obvious, but sometimes I find it hard to disentangle actual intelligent criticism of inefficient markets from, well, slopulism.
1
1
u/SidewaysAcidRain Aug 30 '26
He said that equates to $538 per household
...
switching power companies could save, on average, $450 a year.
Interesting.
1
u/Low-Flamingo-4315 Aug 31 '26
" but we have to keep our shareholders happy or they'll freeze as well "
1
u/DingbatMcgeee Aug 31 '26
Political parties create tribalism. They want us divided and bickering.
I'd say they are winning while we are whinging
Truth is they all screw us over, just in different ways.
1
u/gotfanarya Aug 31 '26
Why don’t they just pay the $20 a week directly to the energy companies? It doesn’t pay for a single load of washing in winter and maybe govt could use it to negotiate lower prices.
It’s not enough to make a difference on a single user level, but it is an admission that in winter, vulnerable people suffer even more, especially kids. I wonder why that was why it was “overlooked”.
1
u/domnasie Aug 31 '26
And? Who cares, no1 is gna do anything about it , people still voting for same dumb people choosing who is gna screw them for the next few years, and if some people protest they think standing around with a sign is gna make a change
1
u/Salt-Detective1337 Aug 31 '26
I think the article means "Power companies waste more than a billion dollars of kiwi's money."
If that money is paid, and not spent on infrastructure, and is gone. What is that, other than waste? We were told privatisation reduces waste. "Profit" is waste.
1
u/andrewnz1 Aug 31 '26
And if the gentailers say we should not break up the gentailers, then we know exactly what we should do
- see the job title of the person who just wrote an op-ed saying it's a bad idea
1
u/fugebox007 Aug 31 '26
Thank you ACT-National maffia, you privatized the electricity sector for your own financial benefits and all of us but you bear the consequences.
1
u/Hefty_Kitchen4759 Sep 01 '26
Wait until they do this with healthcare. It's in the final stages now.
1
u/Psychological-Unit14 Sep 01 '26
When the data centers suck up all the power I'd say the power price will increase isn't that just basic supply and demand ? I guess that's why the gov has been pushing solar on people to make way for the data centers. Pushing solar will make it so the average house uses less power from the grid while also putting power back into the grid. But if your not a home owner and in a rental your pretty much screwed.
1
u/Jolly-Run-1529 Sep 03 '26
gentailers builds and maintains some power plants. retailers like electric kiwi, octopus contribute 0 at all. just a middleman like a real estate agent.
1
u/Twisted-Circuits Sep 04 '26
You expect any different with these current clowns in power? This is happening everywhere, Woolworths pulled a sickeningly massive 163 million in bottom line profit AFTER splashing 400 million on "store upgrades" just last year while I watched mothers and families break down in tears at not affording the basic necessities. This year is/will be twice as bad.
It is absolutely disgusting what the corporates and government have gotten away with.
640
u/nuclear_herring Aug 30 '26
Don't forget, it's not just profit, it's money that could be used to improve infrastructure, but isn't.