New Zealand's third largest power retailer Mercury Energy is ditching its expansion plans adding that revised electricity bill by the government would create unacceptable risks and uncertainties at every level that could eclipse its profitability.

Terming the reforms as a blow to competition, James Munro, the General Manager of Consumer Market added, "We're just not sure if these series of reforms are going to encourage competition."

The New Zealand Herald reported that the firm has announced to go slow on its previously announced expansion plans in two North Island cities and a town. Firm's parent Might River Power is, however, entitled to sell power to Meridian Energy in the South island under the new electricity reforms by the government aimed to expedite completion in the sector and providing customers with power at cheap rates.

Earlier, during last week, Meridian Energy scraped its plans for the issue adding that it needs more time to study the proposed reforms by the government. Munro further added, "The effect of the reforms as announced is to put Genesis in a position where they hold unprecedented market power during a dry winter."