The country's biggest power generator is facing official questions amid fears our power bills could be in for a winter surge.
An inquiry has begun to examine the cause of sky-high prices on the wholesale market, which are threatening to double prices for many ordinary consumers.
Cold weather and low lake levels - two thirds below average and declining thanks to the drought - are a recipe for high wholesale prices, which are currently three times the average amount.
Generators supply power to the wholesale electricity market, then retailers like On Energy and Trustpower buy from that market.
The problem is generators like Meridian, which controls 70% of all hydro power, are also retailers.
"There's a fear that the large generators bidding into the market may be actually playing a little game where they are able to beat up the price more than justified for their own purposes," says Graeme Purches of Trustpower.
John Barton of On Energy says the market would work better if the generators were separate from the retailers.
"Then the chances of a generator favouring its own retailer would be reduced."
Now the industry's own referee - the market surveillance committee - will investigate the row and find out whether any player is abusing its position and putting undue pressure on wholesale power prices.
Meridian denies that.
"The companies could have bought power from Meridian a lot earlier in the piece, they haven't chosen to do so and now they find themselves in the situation where prices are now being dictated by the fact that hydro storage levels are very low," says Alan Seay of Meridian.
But if lake levels do not rise and prices remain high households will feel it.
"People could expect a $100 normal power bill to very easily be $170, or $200," Graeme Purches says.
