Electric Kiwi and Haast Energy Trading have filed a formal complaint with the Electricity Authority (EA) against rivals Genesis and Contact Energy following the North Island's rolling blackouts earlier this week.
The power companies allege an undesirable trading situation (UTS) - defined by the EA as "an extraordinary event which threatens, or may threaten confidence in, or the integrity of, the wholesale market" - occurred on Monday night.
They accuse Genesis and Contact of being in breach of the High Standard of Trading Conduct provisions of the Electricity Industry Participation Code, and have asked the EA to investigate whether their conduct amounts to a market failure.
The UTS complaint comes after thousands of properties were plunged into darkness on Monday when Transpower, responsible for the country's electricity transmission, warned there was insufficient generation to match record-high demand on one of the coldest nights of the year.
Transpower on Wednesday admitted it "made an error" when calculating where power needed to be cut after it mistakenly pulled the plug on too many homes - but said if electricity companies had just generated enough power, the blackout would never have happened.
However Genesis CEO Marc England has defended not having the Huntly Power Station running at full force or firing up its third coal-fired boiler unit, saying Transpower's warning came too late.
Energy Minister Megan Woods asked for an explanation and assurances the incident would never be repeated in a letter to power generators earlier this week.
In their complaint, Electric Kiwi and Haast Energy Trading claimed Genesis, as a supplier that generates and retails electricity, ignored their responsibility to ensure adequate electricity supply.
They also allege both Genesis and Contact "withheld generation capacity in abuse of their market power", and urged the EA to stop the finalisation of prices for the periods concerned and reset prices as if those thermal plants were offered.
"Otherwise a perverse outcome would occur in which generators are rewarded for withholding capacity," they said.
Electric Kiwi chief executive Luke Blincoe says Genesis seems to "lack an appreciation of their responsibility to the New Zealand public".
"There is no doubt that confidence in the electricity market has been hugely damaged once again," he said.
"Genesis claims that they covered their own customer's needs, and evidently, they feel they have no responsibility to other Kiwi families and businesses to keep the lights on. We simply don't agree that is good enough.
"They were gifted these assets, and we're confident that if the generators weren't vertically integrated then we would stop seeing these issues."
Genesis didn't respond to Blincoe's comments, but told Newshub it intends to "co-operate fully with the Electricity Authority, as appropriate, in respect of any process they may undertake regarding the events of last Monday".
Contact CEO Mike Fuge told Newshub he'd seen Electric Kiwi and Haast's UTS complaint, and "strongly refutes" any suggestion Contact has not operated with high standards of conduct. He said Contact supported Transpower's enquiry into the events that led to the blackout.
The company is adamant it had 100 percent of its available generation in the market on Monday night, and is working to ensure any customers impacted by the outages are fairly compensated.
"The TCC (Taranaki Combined Cycle Power Station) has not been operating since July 30," Fuge said.
"Based on demand forecasts we switched it off in order to prioritise renewable generation and use the water down south to generate at Clyde and Roxburgh to minimise water spill.
"TCC requires 72 hours to be recalled into use and begin generating. It provides inflexible thermal generation and is poorly suited to meeting short-term capacity in a market where electricity demand strongly exceeds supply."
Blincoe says the incident shows companies that both generate and retail electricity "don't have the right commercial incentives to act in the interests of New Zealanders", and urged industry reform.
"Twenty-six years after the Bradford reforms it's time to break up the generators for the benefit of Kiwi consumers. It's bad enough that consumers are paying through the eyeballs for electricity, now they have to face uncertainty of supply. It's time for action."
Elderly advocacy group Grey Power on Wednesday said the incident put older people's lives at risk and showed the industry was "broken beyond repair".
The group's president Jan Pentecost agreed a complete overhaul was a matter of urgency, saying "apologies and even rolling heads will not be enough".
