Consumer on Power SOEs

The Herald reported:

Consumer NZ chief executive Sue Chetwin agreed with Mr Key’s assessment that electricity prices would not increase with partial privatisation.

“The power companies over the past 10 years have been rapacious in putting up their prices and I don’t see that making part of the company available for the public to invest in will make much difference there.”

However, Ms Chetwin said companies would become more transparent and would have to explain their actions to the public.

“At the moment nobody really looks at the SOEs [state-owned enterprises] because their shares aren’t being traded. But once they are being traded, the company will have to adhere to stock exchange rules and be much more publicly available.”

Having a company listed on the stock exchange means that it has to be more transparent over what it is doing, and will also require public AGMs where minority shareholders can attend and speak.

There is considerable debate about the value of some of the power companies, and hence what is a reasonable return on their asset base. A stock exchange listing will also proviide a market valuation of the company’s worth.