In the wake this week's publicity over recent significant power prices increases - and Energy Minister Pete Hodgson's apparent approval of those hikes - TrustPower has come out saying large power price increases beyond this year remain a possibility unless New Zealand uses electricity more efficiently and builds new generation close to where power is consumed.

Chief executive Keith Tempest says there is no point in spending huge amounts of money building transmission lines to transport power long distances, when there are alternatives that bring increased security of supply and reduce the amount of power being lost in transmitting it from the point of generation to the point of consumption.

"More distributed generation, using renewable resources like wind, water and solar, built close to where power is used, has to be New Zealand's key focus. Otherwise, we run the risk of investing money in transmission when it should be used for more generating capacity.

"In an environment where consumers have to pay for increasing transmission costs on top of the electricity they use, it makes simple sense to build enough generation to keep ahead of demand, otherwise cost increases are inevitable."

TrustPower is presently doubling the size of its 68MW wind farm on the Tararua Ranges, near Palmerston North, as well as looking at other wind and hydro opportunities in various parts of the country.

Tempest says New Zealand also needs to focus much more seriously on energy efficiency, to help limit the rate at which electricity demand grows, and ensure the already delicate demand and supply balance is not eroded further.

"By world standards New Zealanders are not particularly efficient users of energy. While it might seem stupid for a company that sells electricity to be advocating that people use less of it, the reality is that if we are not as a nation prepared to pull together and make an effort to improve the way we do things, we should not be complaining about having to pay higher power bills.

"A combination of more efficient energy use and responsible use of local renewable resources for electricity generation has to be the best way to keep future power bills down."

This week Hodgson said he believed recent prices hikes were warranted, but cautioned against any "overshooting" by retailers increasing their prices more than was necessary to build new generation facilities. TrustPower and Genesis Power had earlier announced prices hikes of about 7% and 15% respectively for some of their customers.