Mercury Energy says it has offered to compensate Dunedin business owners after enticing them to switch to the power company, and then withdrawing the offer.
Mercury cold called hundreds of businesses, offering them 20-30% savings on their power bills.
More than 400 businesses accepted the offer and a contract was recorded over the phone.
But Mercury reneged when it realised the quotes had not included the local lines charge.
The company says it would have lost $1m over the two-year contract period if it had gone ahead with the deal.
Mercury's general manager James Munro says the company is now offering 50% of the savings originally offered, as compensation.
He says Mercury will still lose money on the deal.
The Otago Chamber of Commerce says some Dunedin business owners understand Mercury's predicament, while others feel it should honour its original offer.
Mercury says it did not confuse Dunedin and Dannevirke
Mercury says earlier reports that the offer was meant for Dannevirke business people and tele-marketers called people in Dunedin by mistake are incorrect.
Dunedin businessman Lindsay Kaan, the managing director of Kaans Catering Supplies, says in his case, the savings Mercury offered would have been more than $16,000 a year.
Mr Kaan says a few days after Mercury contacted his supplier to arrange the changeover, the power company contacted him to say the deal was off because it was actually meant for Dannevirke.
"If they could offer Dannevirke that pricing, how come they couldn't offer it to us?" he asked.
Dunedin business owners hope Mercury representatives will attend a meeting to discuss the matter next week.