Mercury Energy has told customers their electricity bills will go up from July because due to the Emissions Trading Scheme.
The increase means residential customers will be paying on average an extra $5 per month.
The price rise is believed to be the first time that a power company is blaming the ETS for cost increases to customers.
Mercury Energy says it will increase prices by 3.3% from 1 July, which means an extra $5 per month on average residential bills and $1.75 per month on gas bills.
Mercury Energy general manager James Munro says prices have to be raised because the ETS will increase wholesale electricity and gas prices.
Prices are expected to increase further later in the year when a rise in the Goods and Services Tax (GST) comes into effect on 1 October.
The Minister for Climate Change Issues Nick Smith says Mercury Energy's price increase is lower than the Government expected.
Genesis and Meridian Energy say they have not decided yet by how much they will increase electricity prices.