Contact's greed

The energy sector needs to be better regulated on pricing to stop companies like Contact pillaging consumers, Progressive MP Jim Anderton says.

He says Contact's behaviour - doubling director's fees when it is increasing prices - is rapacious.

"This is a company that has just declared earnings (EBITDAF) of $567 million - or nearly a thousand dollars per customer. Its profit after tax and financials was $232 million. No wonder it has executives on million dollar salaries."

The government is expecting reports from the Commerce Commission and the Electricity Commission about adequacy of competition in electricity markets. Jim Anderton says, in addition to those reports the time has arrived for energy companies to have to justify price increases to an external regulator.

"Consumers are paying for the directors fees set at greed levels and for rapacious dividends going to the company's mainly overseas owners.

"Contact Energy should never have been sold. Now that it has been, the electricity industry needs more regulation on price. Contact's behaviour shows competition in the market is not restraining the company."

SOE directors get paid half as much as Contact Directors. Privatised SOEs line the pockets of the people who run them.

"The story was the same with other privatised government businesses, and I warned Contact would overcharge as soon as Winston Peters, as Treasurer, began preparing it for sale in 1998. Mr Peters should be apologising for helping to get Contact ready for sale, just as he helped to sell Auckland Airport, started the process of selling Solid Energy* and now wants to sell shares in Kiwibank."

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* Budget Speech, 14 May 1998, Hon Winston Peters, Treasurer.

ENDS

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