The Benmore Dam in the Waitaki Valley spilling water after heavy rain. Meridian Energy, which owns the dam, was partially sold to investors in late 2013. Shares have surged since.

The Government may be getting more in dividends from its 51 per cent holding in three major power companies than when it owned the companies outright, a new report claims.

On Wednesday TDB, a Wellington corporate advisory firm, published a report on the mixed ownership model, a process under which the former National-led government sold 49 per cent stakes in Mighty River Power (now known as Mercury), Meridian and Genesis to private investors.

The sales process was fraught; Opposition parties collected enough signatures to force citizens initiated referendum and a Labour/Green electricity policy was blamed for wiping hundreds of millions off the amount raised.

Critics warned of a loss of control as well as dividends going to private hands, but ultimately the sales went ahead, raising around $4.7 billion from share sales, below the original $5b-$7b target.

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The TDB report, headed by former Treasury director Phil Barry, claims that, at least by one measure, the Crown is now receiving more in dividends from the electricity companies now than when it owned the companies outright.

"The exact change in Crown dividend returns from pre to post-listing depends on how special dividends are treated and whether dividends paid or dividends declared are used," the report states.

Under any measure, the dividends did not fall in line with the lower Crown holding, the report said.

"On one measure – [that is], when special dividends are excluded – the Crown received more in dividends post listing on its 51 per cent holding than it did when it owned 100 per cent of the companies," the report claims.

Throughout the sales process, National claimed the partial privatisation would improve the performance of the listed companies, and the report shows the returns to shareholders since the sales have been extremely strong.

TDB estimated that total annual shareholder returns for the companies from the day the companies' respective shares began trading on the NZX was 26 per cent for Meridian, 22 per cent for Genesis and 12 per cent for Mercury, well ahead of the 7 per cent seen by Contact and Trustpower, two private electricity companies.

However, TDB acknowledged that part of the exceptional returns for Meridian and Genesis was not due to improved performance, but instead the risk of New Zealand Power, an electricity policy announced by Labour and the Green Party days before Mercury was due to go to market.

The policy, which amounted to a major overhaul of New Zealand's wholesale power market designed to cut prices for consumers, depressed the sales prices of both Meridian and Genesis, largely because shares in Mercury sank after listing, as investors fretted about the risk of the policy.

Mining company Solid Energy was originally meant to be part of the mixed ownership process, but was withdrawn when its problems - which would eventually see the company virtually collapse - came to light.

'Overwhelming success'

National's finance spokeswoman Amy Adams said the report showed the programme had been an "overwhelming success" delivering $4.7 billion for public infrastructure.



"The report also shows that opposition to the Mixed Ownership Model was misplaced. It didn't lead to higher electricity prices. And it didn't result in a drop-off in renewable energy generation, which has increased over the period," Adams said in a statement.



"The current Government has an irrational opposition to the private sector. Labour's ideological resistance to private-public partnerships to build public assets means a number of important projects are failing to get off the ground."

Act leader David Seymour said the programme should be extended to the remaining state owned enterprises, such as NZ Post and Landcorp.

"A partial privatisation would free up revenue for new road and rail projects, closing the so-called ‘infrastructure gap’. It would give Kiwis families new investment opportunities. And it would subject these companies to market forces, requiring them to deliver better results for Kiwis as shareholders and customers."

In 2015, Labour dropped the controversial NZ Power policy, which then-leader Andrew Little said was too difficult to explain to voters.

Since the election, Energy Minister Megan Woods has announced a review of retail electricity prices.