A Dunedin-based power retailer, Payless Energy, is to stop selling power because of what it calls 'unusual market volatility'.
It warns the only retailers likely to survive the 'unsustainable' wholesale prices are the ones that generate electricity too.
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Payless Energy has been selling electricity to Otago customers for seven years, but says the increases in wholesale prices seen in recent months are not sustainable in the long term.
Chessa Mierzejewski, Payless Energy managing director, says they can't be expected to be keeping prices low for customers while they are hit with prices sometimes five times higher than usual for periods of time.
Wholesale energy prices in October are four times higher than usual.
Minister of Energy and Resources Dr Megan Woods says there is no question that high prices have an impact on this.
"This is exactly why the electricity pricing review has one of its main focus points - the contract market for electricity."
Steve O'Connor, CEO of Flick Electricity, says if they don't have independent retailers in the marketplace, they don't have innovation, they don't have choice for consumers, and they don't have downward pressure on prices.
High prices are being blamed on low hydro-lake storage and a failure of the Pohokura gas pipeline off Taranaki, for the second time this year.
Wholesale spot prices of 30 cents per kilowatt hour have seen Flick Electric shed 2500 customers, but it says more have been transferred to fixed price contracts.
It says the Electricity Authority needs to check that electricity generators are operating properly, based on the rules.
"If they believe the market isn't delivering the right outcomes - and it's hard to believe that's the case if we're seeing good operators fold - then they need to think how those rules need to adjust," says Mr O'Connor.
The Energy Minister says prices should ease by December.
"If conditions are returning to normal, prices should be returning to normal."
Flick Electric says the market conditions still don't warrant the prices we're seeing. It also blames opportunism by the electricity generators and a lack of competition in that market.
Newshub.
