Cabinet will today discuss whether Contact Energy is abusing a position of market dominance, Prime Minister Helen Clark says.
The power retailer announced on September 30 it would increase its prices by at least 10 percent from November 1, drawing demands from consumer groups for an inquiry.
Miss Clark said it was a serious matter.
"It's the view of the Electricity Commission and it's certainly the view of the minister of energy that the price rise that Contact has announced, and the reasons for it, simply aren't justified," she said on NewstalkZB.
"We're having a discussion at cabinet today, and we will bring in senior officials to look at whether Contact is abusing a position of market dominance."
Miss Clark said an issue to be considered was whether there were alternative suppliers people could switch to.
"Can they go from Contact to someone else who gives them a better deal? If a company has market dominance, that triggers the attention of the Commerce Commission," she said.
When Contact announced the price rise, Consumer New Zealand chief executive Sue Chetwin said it was "up there with the most rapacious" of the power companies.
A month before it announced the 10 percent price rise, Contact posted a $237 million annual profit and said it was going to nearly double directors' fees to $200,000 each.
