Meridian Energy has inked a four-year deal so it can get electricity from its counterpart, Genesis, if dry weather means it can't generate enough hydro power itself.
The agreement begins next 1 January and allows Meridian to use up to 150 megawatts of Genesis' electricity each year.
Meridian currently has a similar 200 megawatt hedge contract with Genesis which ends in October.
Meridian Energy markets and production general manager Neal Barclay said the deal gave the company more options, should water flows dry up into its hydro catchments.
"We went to the market to run a competitive process to try and find cover for dry winter sequences, and Genesis put the best deal on the table for us," he said.
"We're extremely happy with the deal. The competitive process worked very well and we ended up with a better outcome than what we thought."
The deal was far more flexible than the previous contract, and the pricing was attractive, Mr Barclay said.
"It was a very close call between a couple of parties but this was the strongest."