According to a report in Stuff last month, New
Zealand’s major power companies raked in more than a
billion dollars in profit over the year while household
power bills surged and many people spent the winter freezing
in their homes.
The “big four” generation
retailers, commonly known as “gentailers”—Contact,
Mercury, Meridian and Genesis—that dominate the market
posted combined profits of $NZ959 million. The state-owned
Transpower, which owns and operates the national grid, also
announced an annual profit of $176 million, a 64 percent
increase on the previous year’s $107 million.
The
profits accumulated by the four companies was more than
1,800 percent higher than the previous year’s result of
$49 million, though short of the $1.5 billion record set in
2022. The Spinoff observed that in terms of operating
earnings, it was “comfortably the most lucrative year the
companies had ever seen,” bringing in a combined $3.65
billion.
Meanwhile, figures from Powerswitch show 14
percent of people cannot afford to heat their homes
properly, 24 percent have missed a power bill payment and 19
percent have been forced to borrow from family or friends to
keep the lights on.
The soaring price of electricity
is a major component of the escalating cost of living. Over
the two years between the June 2024 and June 2026 quarters,
salary and wage rates increased by a total of just 4.4
percent, according to Stats NZ’s Labour Cost
Index.
Over the same period local authority rates and
payments rose 22 percent, electricity 21.4 percent and
petrol 17.2 percent. Health insurance increased 39.4
percent, while dwelling insurance rose 9.2 percent.
Supermarket prices skyrocketed, ranging from a 28.2 percent
increase in beef mince, to 26 percent for milk, 42 percent
for butter and 67.6 percent for bread.
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Lower-income
households are hardest hit with essential expenses
commanding more of their budgets. Cold, damp homes are
contributing to the spike in winter illnesses.
Habitat
for Humanity spokesman Conrad LaPointe told Radio NZ doctors
are making around 3,500 referrals a year to his organisation
and others which monitor housing standards, because of
housing-related health problems. “When we’re walking
into homes, what we do find is these homes are still very
cold in winter. The heat pumps are not on,” he
said.
Hospitals nationwide are currently in crisis,
their Emergency Departments overwhelmed by an influx of
patients suffering from influenza, bronchitis and
pneumonia.
Power companies are boosting their profits
with exorbitant pricing. Transpower ranks electricity offers
from cheapest (hydro and wind) to most expensive (coal and
gas). The wholesale spot price is set, every half hour, by
the highest-cost active generator required to keep the
lights on.
If a coal or gas plant such as the Huntly
Power Station sets the wholesale price at a high rate, all
generators feeding the grid—including those running on the
cheaper renewables —are paid that same high price,
generating windfall profits. The benefits flow almost
exclusively to the gentailers who control 85 percent of the
market.
A petition signed by 82,000 calling for
radical change to the electricity industry is set to be
presented to parliament this month.
With an election
on November 7, the National Party, which leads the coalition
government, and the opposition Labour Party, are blaming
each other for the dire situation.
National’s Energy
Minister Simeon Brown blamed the previous Labour government
for undermining NZ’s “energy resilience” by banning
oil and gas exploration. In turn, Labour’s Megan Woods
pointed at government-owned Transpower for banking millions
in profit. “Those dividends belong to the public, and the
government needs to ensure they are used for the public
good,” she declared.
In March, Winston Peters,
leader of the far-right populist NZ First Party in the
coalition, launched an election policy to break up the power
companies into separate generators and retailers.
“You’ve been paying far too much for power,” Peters
said. “The current system is designed to make maximum
profits for power companies, and everyday Kiwi families and
businesses are the ones paying the price.” Peters, who has
held the balance of power in successive governments, both
Labour and National, has no intention of doing anything to
threaten profit gouging.
All the capitalist parties
defend and have for decades presided over the privatised
energy market created during the 1990s.
The Greens’
election policy is to establish Kiwipower, a new state-owned
enterprise backed by a $980 million four-year appropriation
to compete with the gentailers and invest in renewable
capacity. Even if enacted, such a scheme would do nothing to
challenge the energy market and dominance of the
privateers.
Te Pāti Māori, (the Māori Party), which
represents the indigenous tribal elite, advocates a $1
billion Energy Sovereignty Fund to give Māori a foothold in
the market with “iwi (tribes) owning generation assets and
Māori businesses participating in the construction and
operation of the infrastructure.”
Emboldened by
Labour’s sweeping privatisation program of the 1980s, in
1998 National’s Energy Minister Max Bradford split the
then dominant state-owned generator, Electricity Corporation
of NZ (ECNZ), into three competing State Owned Enterprises
(SOEs), each owning and operating their own power stations.
Contact Energy was already carved out of ECNZ in
1996.
Bradford’s move, then supported by Peters, was
accompanied by effusive claims that it would secure supply
and that “competition” in the wholesale market would
drive down consumer prices through the law of supply and
demand. The claims soon proved to be a complete fraud.
Domestic retail prices were significantly higher within a
few years and continued rising through the 2000s.
The
gentailers were privatised in two waves: Contact Energy was
fully privatised in 1999, and the three SOEs—Mighty River
Power (Mercury), Meridian Energy, and Genesis Energy—were
partially privatised (49 percent sold) between 2013 and
2014, with the Crown retaining 51 percent controlling
stakes.
The Labour Party and its allies organised a
“Keep Our Assets” petition in 2012, which triggered a
referendum in 2013 in which 67 percent of voters opposed the
privatisations. The National Party government simply ignored
the result and Labour and the Greens did not reverse the
asset sales when they formed a coalition government with NZ
First in 2017. The entire campaign had been a
fraud.
The “big four” power companies are now
collectively valued at $38 billion. They have been far more
focused on paying dividends to their shareholders than
reinvesting in necessary infrastructure. In the last decade
they have paid out $10.8 billion in dividends, with only
$4.5 billion going to new power projects.
According to
Consumer NZ, residential electricity prices are, when
adjusted for inflation, 65 percent higher than they were
when the retail market was created in
1999.
Privatisation has served to redistribute wealth
from the mass of the population to a small financial elite,
which has been enriched at the expense of working class
households.
According to the Electricity Authority,
about 700 households per month are having their electricity
disconnected for non-payment. Last year 46,895 requests for
post-paid electricity connections were declined due to low
credit ratings, forcing families onto pre-paid
connections.
Essential services like water and
electricity are necessities of life that must be provided to
everyone. These utilities must be placed in full public
ownership—not under the control of the capitalist state,
which is an instrument of the financial elite, but under the
democratic control of the working class. This requires
nothing less than the abolition of capitalism and the
socialist reorganisation of society.
By John
Braddock, Socialist Equality Group
19 September
2026
Original url:
https://www.wsws.org/en/articles/2026/09/19/nagm-s19.html
