Trustpower, New Zealand's fifth largest electricity company, is considering selling its retail business as part of a strategic review.
The Tauranga-based company has more than 230,000 customers across electricity, gas and broadband.
This morning the company announced a strategic review which would test interest in the business "while also exploring the merits and business case to establish a standalone generation business".
Infratil, the majority owned of Trustpower - and itself the subject of takeover interest - has already said it supports the review.
Infratil is also conducting a strategic review of its majority stake in wind farm developer Tilt Renewables.
Shares in Trustpower dropped on the news, down 25c at $8.51 at 11.30am.
Any sale is likely to have a major impact on the Tauranga Energy Consumer Trust (TECT), which owns more than a quarter of Trustpower's shares. Customers of Trustpower typically receive rebates from the trust.
Trustpower said changes to the retail energy markets were the "primary" driver of the review.
"Electrification and decarbonisation, decentralised energy, digital trends in service provision and utilities convergence are all shaking up traditional operating models," chairman, Paul Ridley-Smith said.
"The Board intends to examine the options available for our market position, given these changes and opportunities."
Trustpower said the review would take "a number of months and no decision will be made to sell or retain the retail business until the completion of that process".
Ridley-Smith said TECT had been informed of the review as a major shareholder.
"As a major shareholder, we have briefed TECT on the strategic review. Both Trustpower and TECT share a common goal of seeking the best possible outcome for the Trust beneficiaries, who are our customers.
"TECT has advised they will be addressing potential impacts on the Trust and the rebate distribution and will communicate with Trust beneficiaries."
In a statement, TECT said it was assessing the impact of the review, which it said would require changes to its structure.
"Trustees are well advanced in developing a proposal that outlines the changes to TECT's structure needed to meet the purpose of the Trust Deed, and to ensure that the best interests of the Trust and its beneficiaries are protected," the trust said.
"In particular, Trustees are focused on protecting the TECT rebate for existing beneficiaries. TECT expects to shortly provide a full update to beneficiaries on the proposed changes and undertake a consultation process."