Mercury boss says market working well as pressure builds for power price cuts
Friday, 1 May 2026
The chief executive of the country’s third-largest power company, Mercury, has told MPs the “gentailer model” is working well, as political debate over electricity industry reform heats up and the sector faces a fresh pricing probe.
Appearing in front of a select committee on Thursday, Mercury chief executive Stew Hamilton pushed back on New Zealand First’s proposal to force the big four power firms to split into separate generation and retail businesses.
“Significant changes to market settings — regulatory settings — really creates uncertainty, which can chill investment,” he said.
“A number of reports have been conducted that suggest the market is working well.”
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Meridian, Contact, Mercury and Genesis Energy saw their combined operating profits jump 42% to $1.85 billion in the six months to the end of December.
Their combined dividend payout to shareholders rose by 10% to $551 million and their investment in growth assets such as new power plants was unchanged from the same period the previous year, at $497m.
Labour energy spokesperson Megan Woods questioned why Mercury was not reducing its power prices to reflect the wet weather and current abundance of hydro power that analyst Forsyth Barr has tipped will result in record full year profits for the gentailers.
The Electricity Authority (EA) announced its own probe into power prices earlier this week.
It stated that households faced about an 8% price rise on average ahead of winter, with most of those increases having come into effect at the start of the month “on top of last year’s 8% increase”.
Stats NZ reported last week that electricity prices had risen 12.5% over the year to the first three months of the year.
The Electricity Competition Taskforce, comprised of the EA and the Commerce Commission, appeared to separately turn up the heat on the sector this morning.
It said it was keeping a watching brief on barriers to competition and market power and that the two regulators could act either jointly or individually “where needed”.
Energy Minister Simeon Brown said he had met with the EA and the commission since his appointment to the energy portfolio earlier this month.
“My very clear expectation is that there’s a real focus on affordability and competition in our electricity sector.”
Asked whether he believed the meetings might have influenced the regulators’ actions, Brown reiterated he had made his expectations clear.
“As to what they do, they are independent. They make those decisions.”
Responding to Woods’ questions on pricing, Hamilton said distribution charges, which the gentailers don’t control, should start to come down over the next few years.
“Then if wholesale prices continue to fall, that will start to flow through in terms of the ultimate cost that consumers see — both industrial and household,” he said.
However, he subsequently clarified he was not forecasting an actual drop in Mercury’s retail prices.
“It is hard for me specifically to say what’s going to happen, based on what the weather’s going to do, that the situation New Zealand is going to be.
“Certainly, for us, a key focus is making sure we’re building power that’s resilient for New Zealand and affordable.”
Mercury smoothed out the highs and lows of wholesale electricity prices and its retail customers were shielded from those spiking to $800 a megawatt-hour in the winter of 2024, he also said in response to Woods’ query.
Hamilton was unable to immediately verify The Post’s calculations that it might only have to pay that price for about 1% of power it sold — principally from a 155MW diesel-fuelled plant owned by Contact Energy that operates as a last resort for the energy system and which kicked into action for 11 days during that year’s power crunch.
“It's not the full amount of electricity that we’re consuming, but the point was there was a period when wholesale prices were quite high,” he said.
Mercury normally generates all the electricity it needs from its own power plants. He was not immediately able to clarify what proportion it had to buy-in in 2024.
Responding to questions from Labour MP Tangi Utikere, Hamilton confirmed he had been paid just over $1.6m in the year to the end of June by the 51% state-owned firm, including a short-term performance bonus equivalent to 50% of his salary.
Chairperson Scott St John, whose own remuneration totalled $221,250, said the company’s remuneration was set out in “excruciating detail” in its annual report.
He subsequently clarified he was not suggesting he thought it was having to report that in too much detail. “I’m just making the point that it’s all there.”
In a potentially positive development for some consumers, Hamilton said Mercury would introduce time-of-use plans in the next “couple of months”.
“That creates more agency or control for customers to move their load to best manage the cost to their household,” he said.
Former energy minister Simon Watts announced in July last year that power firms would be required to offer such plans by the end of June.