Cash cow utilities 'creaming off profit'
State-owned power companies are cash cows that are "creaming" profits from customers who have seen prices rise about 55 percent in recent years, consumer groups say.
State-owned Meridian, Mighty River Power, Genesis and Transpower turned combined operating profits of close to $790 million in the past six months, up about $65 million. All reported their profits yesterday, though bottom-line profits were significantly affected by one-off charges under new accounting rules.
Excluding those charges, which are not actually cash costs, the operating profits were all strong.
Molly Melhuish, an energy analyst for the Domestic Energy Users Network, said "the state-owned companies have really creamed it" in the past six months, with ever-increasing profits.
"Householders are increasingly frightened of their power bills," she said. They were turning off power even though the risk of chest illness, heart attack and strokes rose sharply in cold homes.
"I expect more winter deaths, because of higher power prices and loss of jobs and income."
Grey Power spokesman Peter Rutledge said Kiwis were being ripped off because power suppliers were "basically a monopoly".
"They are being used by the Government as a tax-gatherer".
Mr Rutledge said about 1600 people a year died unnecessarily because escalating prices prevented them from keeping properly warm in winter months.
In the past year, average prices have gone up more than 7 percent, equal to more than $127 a customer, and running up much faster than inflation.
Ms Melhuish said power demand had "fallen off a cliff" recently, diving 12 percent from last year. Only about half reflected a cutback from the Bluff aluminium smelter, which had reduced output because of a drop in demand.
Ms Melhuish said the rest could be recession-related or people using less power because of their fear of the next big bills. If demand for power had slumped and hydro power lakes were full, there was no reason to keep increasing power prices so generators could build more power stations, she said.
"They lift prices just because they can. These profits are more blatant than ever."
State-owned power companies give the Government about $1 billion a year in dividends, gst and corporate taxes, compared with about $500 million five years ago.
Major Electricity Users Group executive director Ralph Matthes said a lot of companies were struggling to make a profit, but some power companies were lifting prices and operating profits were "very healthy". "They are lucky to have that sort of business. How can they lose?"
Consumer chief executive Sue Chetwin said power companies could have been far less aggressive about price rises while still making profits. "It's extremely disappointing that, while they are increasing profits, they are also increasing prices."
- By JAMES WEIR and GREER McDONALD, The Dominion Post
The Dominion Post