Suggestions some power companies are using the emissions trading scheme (ETS) as an excuse to increase prices beyond what is warranted has sparked a new call for the government to reduce its dividend take.
Prime Minister John Key and some of his ministers have in recent days warned power companies -- some of them state-owned -- that price gouging in the face of the ETS was not acceptable.
"I'm concerned because some of the power companies are claiming that the emissions trading scheme is the reason they want to raise prices by double digits," Mr Key said today. "Well that can't possibly be the case, the estimates we've had is at most a 5% increase in power prices, and in the majority of cases it will be less than that."
While some companies have signalled retail price increases after July 1 as a result of the ETS coming largely into effect, others haven't.
Power generation comes from a varying mix of renewable and non-renewable sources, meaning some companies will have heavier financial obligations than others under the scheme.
Mr Key pointed out yesterday that Genesis Energy, which operates the emissions-heavy coal and gas fired Huntly Power Station and is the most exposed to the ETS of all providers, had not indicated a post-July 1 price rise.
Labour leader Phil Goff expressed concerns about the situation today. "We've seen price gouging. We've seen it from the privatised sector and we have also seen it from the government sector -- we're taking too high dividends."
Dividends going to the government from state-owned power companies ought to be about sustainability in power supply and transmission and not about gouging to make a profit for the state. That meant not taking dividends more than what was necessary for reinvestment, Mr Goff said.
Under National the ETS is being eased in at half the obligation to emitters than it would have been under the Labour-designed scheme, but Mr Goff said National's revised scheme meant the average taxpayer would be hit hard while emitters got heavily subsidised.
He admitted Labour's scheme would have cost more, but said there would have been "complementary measures" to assist those hit hardest. "That's the difference."
Mr Key and State Owned Enterprises Minister Simon Power said there were no suggestions that the government would adjust its dividend policy.
"Between 2000 and 2008 we saw power price increases of about 67% across the board, and yet the Crown was only returned 1.5 % on its $25 billion investment across the portfolio, so they don't necessarily equate," Mr Power said.
The dividend policy was a "moveable feast," Mr Key said. "Yes, the government argues it wants a 9% return, but we've never enforced that en masse and I don't think it's an argument of dividends." He said power price increases had slowed over the past 12 to 18 months.
He also maintained that the likes of ACC levy and GST increases, along with the ETS burden on taxpayers, would not overtake the gains set to be made by many new Zealanders through tax cuts announced in the budget. A projected 6% inflation spike was a one-off and Treasury figures suggested wage earners would still be better off, he said.