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National MP Nick Smith has written to the Commerce Commission over Meridian Energy's claim it is carbon neutral.
Dr Smith, National's climate change spokesman, said Meridian Energy should stop claiming its electricity was carbon neutral when it had to buy a third of its power from thermal generators.
State-owned Meridian, New Zealand's largest power company, has billboards and advertisements stating its electricity is carbon neutral.
In a letter to chairwoman Paula Rebstock, Dr Smith asked the Commerce Commission to look into Meridian's claim it was selling "certified carbon neutral electricity".
Last week Meridian had publicly acknowledged that because of low hydro lake levels it was having to purchase a third of its electricity off the grid from thermal generators to supply its customers, Dr Smith said.
"This is further acknowledged on their website where it says that in dry years it may need to purchase such power off the grid. The website says it will offset these emissions from the purchase of carbon credits, and states it has been certified as carbon neutral until 30 June 2008.
"It is a misrepresentation for Meridian to sell thermally generated power as carbon neutral and it makes a mockery of the term," Dr Smith said.
Meridian had been "taking customers off" other power companies on the basis of its carbon neutral claim.
Dr Smith said that at the centre of the issue was debate over carbon credits, generated from activities that either remove or prevent emissions into the atmosphere.
Meridian had noted it had purchased carbon credits from Trust Power from its Tararua Wind Farm.
"The theory is that by building the Tararua Wind Farm it has reduced the need for thermal power, thus creating units, and that these units can then be sold to Meridian and that by purchasing these and thermal power, Meridian magically is able to sell carbon neutral electricity. This is not credible," Dr Smith said in the letter.
This created the "ridiculous" scenario where power from the wind farm was twice being claimed carbon neutral -- once when it was sold to customers and a second time when the carbon units were sold to another power company.
Dr Smith said he had no problem with electricity generated by Meridian's hydro and wind farms being marketed as carbon neutral.
Or with Meridian making plain that in dry years it had to buy thermal electricity to maintain security of supply and that it was also purchasing carbon units to offset this.
The reality was that in times of drought and the wind did not blow, thermal power was needed to keep the lights on.
But it was not okay to describe this power as carbon neutral, Dr Smith said.