Hundreds of thousands faced power hikes in the last few months of 2003 and now the next raft of increased charges are about to hit.

The first increase for 2004 will come from Contact Energy subsidiary EmPower, which is hiking charges for about 70,000 of its residential and business customers on Auckland's North Shore by an average of 14-15% from February 15.

Then five days later, Tauranga-headquartered TrustPower will raise its prices in Central Otago, where about 20,000 residential customers face a 7% hike.

Genesis, Mercury Energy, Meridian Energy and budget retailer Energy Online say they have no immediate plans to increase their prices, but warn it is inevitable higher costs will flow through to consumers.

The main generators/retailers blame rises in wholesale electricity costs, which make up about 30% of the average power bill, the wind down of cheap Maui gas and the cost of future power projects.

However, the Electricity Networks Association, which represents lines companies, has sharply criticised the latest moves, with ENA chief executive Alan Jenkins saying the price rises are hard to justify.

"We certainly can't see much competition in the retail industry, which is not under the same pressure as the lines companies that are threatened with legislation to reduce their real costs each year," Jenkins told EnergyReview.Net from Wellington today.

He said the weak competition between the big generators/retailers was a fundamental flaw in New Zealand's electricity system.

It was ridiculous that generators/retailers could "budget" for future higher costs before new plant was even built. Long-run marginal costing should mean the market being prepared to pay higher prices for new generation capacity coming onstream, but not for planned projects.

"When the market is prepared to pay, say, eight cents a unit for new generation, this would also apply to old depreciated plant as well.

"The present prices rises seem to be excessive and an indication of an unhealthy retail market."

Jenkins suggested retailers offer five-year contracts to smooth the likely price path and to give some certainty to people.

Electricity Commission chairman Roy Hemmingway is reported as saying it's too early for him to comment on the price hikes as the commission does not take over governance of the electricity market until March.

Last August Mercury started to increase charges to its Auckland residential customers by 18% or more, while Meridian increased its prices by about 15% for its 230,000 customers last September.

Contact spokesman Patrick Smellie said consumers should expect continued price rises over the next four or five years because of increased wholesale prices and the rising cost of gas.

TrustPower spokesman Graeme Purches said growing wholesale costs, coupled with increased transmission charges by Transpower, might mean further increases of 10-15%.

National Party energy spokesman Roger Sowry has been reported as saying environmental legislation is also hindering the development of new electricity generation facilities.