Treasury Confirms Electricity SOEs Have Behaved Appropriately

Advice the government has received confirms that the three state-owned electricity generators have acted entirely appropriately during the winter power shortage, the Minister for State Owned Enterprises Mark Burton said today.

Advice to Mark Burton and Finance Minister Michael Cullen from Treasury and CCMAU, along with information provided by Mighty River Power, Genesis Power and Meridian Energy, has all been released to the National Party under the Official Information Act.

"One would hope that being in receipt of this information will convince Bill English, Lockwood Smith and others to desist from their irrational attacks on the electricity SOEs," Mark Burton said.

"Dr Cullen, Energy Minister Pete Hodgson, and I have repeatedly told the House and the public that claims of profiteering are untrue.

"These papers confirm that there is no evidence that SOEs have acted irresponsibly. Meridian Energy and Mighty River Power have not benefited from high wholesale prices, as they have cut output to the bare minimum required to cover hedged contracts and retail commitments.

"Genesis Power has used its reserve thermal capacity to increase output. This resulted in profit running ahead of forecast for a short period prior to August 1st. Treasury and CCMAU note that this does not reflect profiteering by Genesis. Rather it reflects the return Genesis should receive for maintaining the electricity market's reserve generation capacity.

"In the words of Treasury: "If we expect their capacity to be maintained as a safeguard, to ensure supply in periods of low hydro capacity, it is important that generators can benefit when prices are high."

"There are imperfections in the electricity market created by Max Bradford, and this government is taking steps to fix them.

"But the behaviour of the electricity SOEs has been entirely consistent with their responsibility to act commercially and as good corporate citizens," Mark Burton said.

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