Photo: RNZ / Russell Palmer
The Electricity Authority has confirmed a preliminary mid-year decision that an undesirable trading situation (UTS) occurred for three weeks in December 2019, when Meridian and Contact spilled excess water from South Island hydro dams causing a spike in wholesale prices.
A group of small electricity retailers and users complained about the spike in prices, which they had to pass on to consumers.
The authority's chief executive James Stevenson-Wallace said the market had acted in an unusual and uncompetitive way.
"We experienced an extreme weather event in the South Island with severe rainfall and lake levels over and above the maximum. Generators were faced with record-level inflows, resource and operational constraints. At the same time North Island generation was aiming to conserve fuel ahead of an impending gas and HVDC (Cook Strait cable) outage."