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Big power company accused of anti-competitive behaviour, causing prices to rise

The Electricity Authority has found one of New Zealand's largest electricity companies may have spilled water from hydro stations unnecessarily, causing prices to rise.

A Meridian hydro dam at work. Source: 1 Sport

It's released a preliminary report into what's known as an Undesirable Trading Situation and found events in December last year may have led to just that.

In early December, Meridian Energy – which is 51 per cent owned by the Government – and Contact Energy spilt water from their hydro stations in the South Island.

A number of small companies allege that led prices in the North Island to rise.

The incident came at a time of heavy rain and flooding, and the companies were required to manage water flows.

"Overall the outcomes in the spot market did not match our expectations of a power system with abundant cheap fuel," the report says.

"There were reasons for some of the things that we observed, such as consent conditions and limitations of generation plant. However, even allowing for these considerations, we consider there was significant unnecessary spill."

The complaint against Meridian was upheld.

Meridian Energy has told the NZX it was responding to an exceptional weather event at the time. It will now make a submission to the Electricity Authority as part of its consultation process.

Complaints against Contact Energy and Genesis were not upheld.

"At the time there was more water than we could use for generation, given the Clutha River was in significant flood," chief generation and development officer James Kilty says.

"Our focus in extreme flood events is always to operate the Clutha system to ensure the safety of communities downstream, our people and assets, and to manage our resource consent obligations."

Contact will also be engaging with the Electricity Authority's consultation period, Mr Kilty says.