New Zealand households will be worse off if the current surge in wholesale electricity prices drives more retailers out of the market, National's energy and resources spokesman, Jonathan Young, says.
The electricity industry is under pressure as wholesale prices soar.
Wholesale, or spot, prices are what retailers pay generators for the power they sell.
Last month, the average wholesale price was $300 per MWh. That's just under three times the highest October monthly average previously recorded.
That's particularly a problem for newer independent operators competing with the big gentailers Contact, Genesis, Meridian, Mercury and Trustpower.
One, Payless Energy, has already pulled out of the market.
"Gentailers have an advantage because when prices are high, they are selling as well as buying so they absorb the cost," Young said. "Independent retailers have to wear it."
Flick, which passes on wholesale prices to customers, lost 2500 customers over October. More shifted to its fixed-price contracts.
Young said the situation was causing huge stress for independent retailers. "We need good levels of competition and solid security of supply. If we start losing retailers it will have a negative effect on households."
At present, only customers on plans that follow spot prices movements are feeling any impact.
Flick is the main variable-pricing provider, with 25,000 customers, but Paua to the People is another.
Power Direct is also believed to have lost a significant number of customers in recent weeks.
A spokeswoman for Flick said the business was sustainable despite the current conditions and it was comfortable with its operations and long-term prospects.
"Flick is here for the long haul, we're not going anywhere. We offer options to protect customers, including fixed price. But if the market stays broken it will mean more closures and far less retail competition, innovation and consumer choice," she said.
"The current market conditions impact all independent retailers badly, not just those who offer spot price as an option. This shows we've got a poor performing market that's damaging retail competition."
Flick joined Pulse, Electric Kiwi and Vocus Communications to lay a joint complaint with the Electricity Authority (EA).
Electric Kiwi chief executive Luke Blincoe said the Electricity Authority (EA) should step up. "By allowing current conditions to go unchecked, the EA is failing to regulate this sector with the independence and vigour necessary to fulfil its responsibility for promoting competition and the interests of consumers. This inaction undermines confidence in the market, and ultimately demonstrates market failure."
The Electricity Authority said it was examining the claim of an undesirable trading situation.
"We're well prepared for these situations and have started our process to determine if a UTS exists," it said in a statement.
"We are in the very early stages of gathering and processing information as part of our investigation of the claim. More information about the expected process and timetable will be provided once the investigation has progressed further."
Part of the current spike has been blamed on disrupted gas supplies.
Young said that could be a forerunner of things to come. "Especially with the new exploration ban. Diminishing reserves, without a relatively immediate commercial discovery, will leave us vulnerable to electricity price increases as we are experiencing. Currently, we don't have a replacement energy source to natural gas and nothing on the horizon except importing more coal."