The Green Party and several power companies are calling for market reform after the Electricity Authority found a lack of competition had pushed up prices.
It found electricity prices were higher than they should've been for more than a month last year because Meridian dumped water from hydro lakes instead of turning it into power.
Dams in the South Island were drained in December last year following record rainfall. But the water should've been used to generate extra electricity, which would've then cut wholesale power prices.
"You would expect the abundance of fuel to reduce the cost of water going through the hydro dam, so you'd expect the spot price to come down during that period," Electricity Authority CEO James Stevenson-Wallace says.
Instead, prices went up because of the water spillage and four other exceptional events.
"We had a confluence of five events that reduced the competitive pressure on the market," he says.
The water spillage was the main problem. The Authority says the water could've powered about 1.2 million homes for a day. The total extra cost is about $70 million.
It would've also prevented coal from being burned at Huntly, lowering CO2 emissions.
Power retailers say Meridian has too much power over wholesale prices.
"What this has come down to is a significant amount of market power sitting with one player and a willingness to abuse it," Electric Kiwi CEO Luke Blanco says.
The Green Party agrees.
"It's incredibly bad behaviour on Meridian's part," Green Party energy and resources spokesperson Julie Anne Genter says.
The party wants changes forced on electricity generators.
"It's the Government's responsibility to make sure the energy companies are doing the right thing for the planet and also providing affordable power to ordinary New Zealanders," she says.
Meridian says it was trying to manage the excess rain and is "disappointed that the Authority concluded the event was an 'Undesirable Trading Situation'". It added it'll "now take time to review the details of the decision".
The Electricity Authority is also investigating Contact Energy and Meridian for Trading Conduct breaches.
In February it'll tell Meridian how to fix the water spillage and there are likely to be retrospective price reductions.