KEY POINTS:
Prime Minister Helen Clark has accused Contact Energy's directors of "greed" and says its recently announced price hike is "completely unjustified" extortion.
Thousands of Contact customers will this week receive letters advising them of a 10 per cent price rise kicking in on November 1.
The letters come
as shareholders vote tomorrow on whether to double the company's directors' pay pool from $770,000 to $1.5 million.
Although the move is opposed by the majority of small shareholders, it is expected to be steamrolled through with the support of Australia-based majority shareholder Origin Energy.
The move will come a week after lines company Vector's directors dropped a bid for a 22 per cent fee increase due to worsening economy.
Speaking at an election meeting in Taupo today, Miss Clark accused Contact of extorting customers and its directors of being greedy.
"This is absolutely extraordinary when the ordinary consumer is extorted over power bills, so there is a lot of greed out there and people's tolerance with that is long, long gone."
She said after the pay rise the directors would each receive an average of $250,000 a year for a part-time job.
She likened their behaviour to the Wall St executives who received massive payouts despite overseeing the collapse of major companies.
"That's many more times than people earn in a hard-working job."
Miss Clark said the company would be behaving differently if it was still a state-owned enterprise and it should never have been sold by the previous National-led government.
Energy Minister David Parker was also critical, saying both the price hike and the proposed directors' fees were "extraordinary" in the midst of a recession and global financial turmoil.
"Directors of state-owned energy companies are paid less than half the amount proposed by Contact, as are the directors of most other companies listed on the New Zealand Stock Exchange."
He gave Contact a veiled warning over its price-setting behaviour saying he was looking forward to reports from competition watchdogs the Commerce Commission and the Electricity Commission, into whether there were instances of monopolistic behaviour in the electricity market.
Engineering Printing and Manufacturing Union national secretary Andrew Little said the move to pay directors more was "outrageous" given the low increases Contact had given to workers, the planned price hikes and the directors' own middling performance.
"This situation is symptomatic of the current climate in which senior executives are paid well out of proportion to the workers that actually keep their companies running.
"Contact hasn't even done that well under these directors' stewardship but they are still rewarded handsomely.
He said the system was clearly broken and in need of reform.
When Contact first announced the price rise earlier this month, Consumer New Zealand chief executive Sue Chetwin said it was "up there with the most rapacious" of the power companies.
- NZPA