The national grid operator Transpower has plans ready in case electricity supplies run short this winter.

The Electricity Commission reported on Monday that hydro lake storage had dropped to a level which could produce supply problems in the winter.

Transpower says the drought in both the North and South Islands has resulted in very low inflows into the hydro lakes, with seasonal inflows into Lake Taupo the lowest ever recorded.

Before the rain of the past few days, South Island lake levels were at about 65% of their average for this time of the year, while Lake Taupo had virtually no hydro storage capacity left.

Transpower chief executive Patrick Strange says generators and retailers have been talking large firms about commercial deals to cut the amount of power they use, if the situation does not improve.

Dr Strange says the option is still at the planning stage, and will depend on rainfall during the next two or three weeks.

Transpower says if the drought does not extend into autumn, and there is no failure at a large thermal plant, there should be no power supply problems.

The Prime Minister says it is too early to consider an energy saving plan for households and businesses.

Helen Clark says the Minister of Energy has been advised there is "something like a 1% to 3% chance of a problem" in the winter.

Miss Clark says there has been discussion and planning within the industry as the drought progressed.