Mighty River Power said it would buy back up to $50 million of its shares as part of its capital management plans.
The company's chairwoman, Joan Withers, said the board believed that the buyback, representing less than 2 per cent of its shares, was a prudent use of capital.
The purchase of up to 25 million ordinary shares could occur from October 15 through October next year, the company said.
"The board's view is that a purchase of our shares, at this time and at current market prices, provides a return above the company's cost of capital and will be value-enhancing for our shareholders," Withers said in a statement.
She said the board had taken into account the company's out-performance against the 2013 initial public offer forecast and the $100m lower than forecast capital expenditure.
Shares in Mighty River Power have struggled to perform since they listed on the NZX on May 10. The shares were issued at $2.50 and shot as high as $2.73 on their first day of trading. But in August, they sank as low as $2.17. Shares in the power generator and retailer closed yesterday at $2.20.
