Power company bosses say the speed of regulation and rate of change in the energy industry is spooking capital sources.
Market uncertainty is also forcing at least one company to rethink further investment in New Zealand.
Their concerns were revealed at Downstream, the energy sector's annual forum in Auckland on Wednesday.
Contact Energy chief executive Dennis Barnes said the industry was facing high churn levels, flat demand for electricity and competitive pricing.
He said the market relied on capital providers such as shareholders and debt markets, and was closely watched by credit rating agencies.
Mr Barnes said any conversation which smacks of intervention, whether the comment is lower prices or keeping an eye on it, spooks them.
"And capital providers come to the six of us and ask us to explain and ask us to tell them what we're doing in our business to stay healthy."
Mr Barnes said unusually high levels of interventions and tinkerings created nervousness among investors.
Mighty River Power chief executive Doug Heffernen said the speed of changing regulations does not fit with long term investment plans.
He said investors are looking for a timeframe approach to regulatory change which is consistent with the lifetime of those underlying assets.
Mr Heffernen said capital providers do not like innovation in regulation.
Steel too
New Zealand Steel president Simon Lingo told the forum that the unpredictable market is putting off its parent company, BlueScope steel investing here.
He said BlueScope's board expresses concerns about New Zealand's third biggest cost, energy, relative to the United States.
"So if we're going to make a decision about where we are going to invest, you've got all this uncertainty and volatility in energy prices, not really sure whether we should be putting further capital into this business versus our assets in the United States."
Meanwhile, power bosses say that the sector risks losing skilled employees because of the burden of dealing with regulatory issues.