Charles Chauvel on power profits

The Press reported:

Labour yesterday called on the Government to stop taking big profits from the electricity state-owned enterprises (SOEs).

“The Government could do this today, with the instant result of lower electricity prices for hard-working Kiwi families and better security of supply from renewable energy,” Labour energy spokesman Charles Chauvel said.

The Government should tell electricity SOEs to cut dividend payments and invest the money in renewable generation that could flatten power price rises, he said.

I have previously blogged on the hypocrisy of Labour preaching lower profits, after it banked $3.1 billion in dividends from energy companies during their term of Government.

A Ministry of Economic Development energy outlook released this week says wholesale power prices are likely to rise by 40 per cent over the next 20 years.

That is much less than the near-50 per cent rise in some residential tariffs over the past five years.

40% over 20 years sounds a lot better than 50% over five years!

But is this standard hypocrisy, or even worse hypocrisy than normal? Because before Charles become an MP, he was a Director of Meridian Energy.

In fact Charles was Deputy Chairman of Meridian Energy in 2005. And what was the company’s net profit after tax in 2005/06? It was $857 million.

Yes in 2005/06 Meridian had an EBIT of $1.03b on gross revenue of $2.22b. Now some of this was from a one off sale, but that money could have been used to lower power prices, as Charles now claims should be done.

Now maybe in 2005/06 the Government was short of money, and didn’t think it could manage with a lower dividend and profit. So what as the deficit in 2005/06? Oh no – it wasn’t a deficit. It was a whopping $11.5b surplus.

So where was Charles in 2005 demanding Meridian pay a smaller dividend, when the Government had an $11.5 billion surplus? Oh he was writing the cheques out.

And now in 2009, when the Government is running a deficit of $7.2b (over 11 months), Charles and Labour cry out to make Meridian less profitable as he says a dividend of $294 millions is far too high.

I am going to enjoy repeating posts like this, everytime Labour call for reduced profits from Energy SOEs.

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