Higher transmission costs, transmission constraints between the North and South Islands, and demand growth were cited by the company as reasons.
This winter, there was a considerable increase in the amount of electricity flowing from the North Island to the South Island because of relatively low lake levels.
Contact Energy spokesman Jonathan Hill said this was coupled with transmission constraints in the lower North Island.
It was becoming increasingly difficult to move power south due to the worn-out nature of the power grid.
The HDVC link is to receive a $672 million upgrade in the next four or five years.
"We believe investment in the transmission system needs to happen as quickly as possible," Mr Hill said.
The South Island was outstripping the North Island in demand "at quite a rate", Mr Hill said.
Over the past 10 years, South Island demand had grown 26%, compared with the North's 22%.
Mr Hill said a large part of the increase in price was also due to national grid charges increasing by 3%.
The company's general manager of corporate affairs, Bruce Parkes, said: "We want people to understand what is driving this."
"An historic under-investment in the grid . . . is finding its way through to the customers".
Mr Parkes said Transpower was focused on improving the grid but was constrained by the need to have all major investment approved by the Electricity Commission.
He also believed the charges the commission placed on producers in the South Island put companies off investing in power generation in the South.
Contact Energy customers will be informed of the changes through letters from the company.
National Party energy spokesman Gerry Brownlee said in a statement the failure to invest in transmission projects large and small had effectively divided the North and South Islands into separate markets for electricity.
The Electricity Commission established by the Labour Government was substantially responsible "for this disgraceful situation".
"The Electricity Commission has cost power users some $230 million over the past four years and the transmission infrastructure is in a shambles," he said.
