Govt To Get Windfall Profits At Your Expense

John Boscawen MP, ACT New Zealand

Press Release Wednesday, 31 March 2010.

Receiving ever increasing dividends from State-owned power companies – such as the $89.5m payout announced today by Meridian Energy - is something the Government will ‘have to get used to’ once the Emissions Trading Scheme comes into effect, ACT New Zealand Climate Change Spokesman John Boscawen said today.

"From July 1, Treasury forecast that power prices will rise by five percent, as generators seek to recover the additional costs incurred from burning fossil fuels - such as coal and gas – due to the ETS,” Mr Boscawen said.

"However, the same ETS will allow companies which have a large proportion of renewable energy sources - such as Meridian - to make massive windfall profits.  This is because of the way the NZ electricity system works, with all generators receiving the same wholesale prices regardless of whether they have to pay for their emissions or not.

"So, when Genesis seeks to recover the cost of burning coal and gas at Huntly, Meridian – which is 100 percent renewable – will be able to increase its prices by the same amount without paying any extra cost. 

"The ETS will lead to greater windfall profits and dividends, not just to the Government owned generators, but also to the privately owned TrustPower and Contact Energy.

"New Zealanders – specifically those on low-incomes – who are already struggling to pay their bills will be penalised by the ETS while the Government receives windfall dividends at their expense.

"Not one of our major trading partners has introduced – or looks likely to introduce – an ETS.  France has just suspended its carbon tax regime.  It’s time that National ended this expensive experiment and moves to suspend our ETS,” Mr Boscawen said.