Parliamentary Select Committee Reports On Recent Activities Of SOE Generators

12 April 2002

Committee Chairperson David Cunliffe said “Today the Commerce Committee presented a comprehensive report to the House on its 2000/01 financial reviews of the performance and current operations of the SOE generators.’

Mr Cunliffe added “The report also includes detailed comparative company analysis, and comment on the state of the energy sector’.

In summary the committee reported on the following matters:

- Genesis’ financial performance exceeded its statement of corporate intent targets in 2000/01 reporting a net profit after tax of $59.9 million.

- Meridian performed strongly over 2000/01 reporting a net profit after tax of $125.1 million.

- Mighty River’s financial returns in 2000/01 compare more favourably on most measures with the other State-owned generators despite its poor hydrology.

- We find it unacceptable that Meridian did not offer certain large industrial customers fixed price contracts and we are dissatisfied with the way the company abruptly communicated changes to its customers.

- We consider that Genesis and Meridian should disclose the same level and type of hydro spill information as Mighty River. It is important for accurate data to be made available to ensure adequate monitoring and efficiency. However, we also note that on the advice of the Minister of Energy all generators very recently began full disclosure of more accurate hydro spill data.

- We are not satisfied with the information provided to the committee in relation to industry self-governance establishment costs by the State-owned generators. We are concerned that they have not kept detailed records of costs incurred to date and with the apparent lack of any precise costing for future commitments.

- We encourage generators to manage resources in an appropriate way during power shortages. We note the Market Surveillance Committee found there was no evidence of the opportunistic use of market power during last winter’s power crisis.

- We have concerns about the effect on competition of customer consolidation and regional concentrations in the retail market.

- We are surprised that each State-owned generator has developed different and often non-complimentary retail customer service measures. We consider the retail customer service information reported by the companies must be standardised to improve accountability and urge progress in the development of common measures. We expect to see uniform measures included in the next round of statements of corporate intent and expect CCMAU to advise Ministers accordingly.

- We are concerned about the poor rating achieved by Genesis in the Consumers’ Institute PowerSwitch survey.

- We are disappointed at Meridian’s performance in relation to certain customer satisfaction measures and consider further improvements are desirable with regard to retail controls and operating procedures.

- We consider there is still room for improvement in relation to the way power companies interact with their customers and resolve complaints, and expect to see substantial improvement over the next 12 months.

A copy of the report will be replaced on the Office of the Clerk website. www.parliament.govt.nz.

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