Wellington, May 22 NZPA - Power companies face public outrage after a Commerce Commission report said they had overcharged customers $4.3 billion.
The big four generator-retailers didn't break the law but used their market muscle to maximise profits, hiking prices 72 percent between 2000 and 2008 while inflation went up only 29 percent, the report said.
By late last night there had been no response from chief executives of state-owned Mighty River Power, Genesis and Meridian and listed company Contact Energy.
Meridian was the only one that offered a comment -- spokesman Alan Seay said that in dry years it couldn't generate because storage lakes were low.
"It's a nonsense to say we make lots of money in those years, in fact those years cost us money."
Energy Minister Gerry Brownlee warned the companies not to try it on again.
"I'm saying it would be an audacious act on the part of any power company to raise electricity prices while they've got this sort of allegation hanging out there," Mr Brownlee said.
"Quite clearly there are flaws with the way electricity is marketed in New Zealand that lead to perverse results demonstrated in this report."
Mr Brownlee is committed to doing something about it and is waiting for the results of a ministerial review he set up earlier this year with a brief ranging from price capping to the market structure itself.
The previous government ordered the Commerce Commission inquiry in late 2005 after complaints about high prices, big company profits and allegations of anti-competitive behaviour.
The report released yesterday said there was no evidence of anti-competitive behaviour or attempts to hinder competitors.
However, analysis by international expert Professor Frank Wolak of Stanford University found prices charged in the wholesale electricity market from January 2001 to July 2007 delivered $4.3b more than would have been earned under competitive conditions.
Labour's energy spokesman Charles Chauvel said the companies had behaved in a way that was unacceptable to most people.
He warned against any attempt by the Government to secure higher dividends from the state-owned companies.
"The report shows why this would be a terrible idea...Kiwi families must come before government dividends and reform must be a priority."