Flick Electric, which named as the energy retailer of the year, says it is not able to take on new customers because of high wholesale electricity prices.
In an update to its customers today the Wellington-based company, majority owned by Z Energy and Eastland Energy said the move was temporary and would not affect its 27,000 existing customers.
"High wholesale prices mean that it's no longer affordable to buy electricity hedges in advance to cover new customers," the company said.
"It speaks volumes about the state of NZ's electricity market when Consumer NZ's Energy Retailer of the Year for 2021 (that's us) can't take on any new customers."
Chief executive Steve O'Connor said there was no way it could buy forward cover for customers at a price which made sense for either side.
"It's really reflective of those forward prices, so it doesn't make sense from either a business point of view or a customer point of view to furnish a price to new customers that doesn't make sense to them or to us."
The company launched as a means of giving retail customers direct access to the wholesale market, but in 2018 began offering a product which was hedged. The "vast majority" of its customers were now on the hedged product O'Connor said.
Markets suggested wholesale prices would remain at unusually high levels for years, O'Connor said.
"We've faced volatility and pretty high prices for a good period now and if you look out all the way to 2024 - that's how far out the ASX goes in terms of futures they remain incredibly elevated and they're effectively prices that are unaffordable for new customers."
O'Connor said it was clear from the Power Switch website (run by Consumer NZ to promote customer switching) that no independent retailers were seeking to take on customers.
"It really is tearing out competition in the marketplace fairly quickly."
Kerry McDonald, who sat on the establishment board of Transpower in the 1990s said this week that the problems in the electricity market stem from the Government ignoring its advice. He said the problems now came around often, it was only a little worse than usual.
O'Connor said the market was showing "the same old problems", but having examined prices in the wholesale market since it was established, he believed the current situation was "utterly unprecedented" and unsustainable.
"This is not only affecting the independent retailers and their ability to compete, but it's also having an impact on large industrial users. We're destroying productivity," O'Connor said.
"Our view is it points to systemic issues that need to be resolved either by the Government or the Electricity Authority acting."
Flick has launched a petition calling for structural separation of the electricity market, splitting the major electricity companies into separate generator or retail businesses.
This week Meridian, by far the largest generator in New Zealand - which also has a substantial retail business including through its Powershop subsidiary - pushed back against the calls, claiming a campaign was underway to discredit the vertically integrated model.
"The two most vocal Independent retailers Flick and Electric Kiwi are both backed by substantial businesses that have the capacity to support new renewable builds, that would enable them to more effectively manage their risk," a Meridian spokeswoman said.
O'Connor said the argument was obviously flawed.
"It's inappropriate to say that just because we're a retailer that we should invest in generation. The market is designed to accommodate those who want to specialise in retail."
"Our market has been designed to accommodate independent retailers," he said. Retailers were typically digitally focused customer-centric businesses, while retailers were specialist engineering businesses focused on capital management.
"It doesn't make sense. It's like saying Noel Leeming needs to be investing in washing machines. No, actually, Fisher & Paykel does that. They do it very well."
The Electricity Authority is conducting a review of the functioning of the wholesale spot and futures market. The results are expected to be released in around two months.