Prime Minister John Key is warning power companies not to use the Emissions Trading Scheme as an excuse to hike power prices on consumers.

The next phase of the ETS comes into effect on Thursday, when a cost is put on electricity and liquid fuels for their greenhouse gas emissions.

Mr. Key accepts that some companies will be more affected than others, and cautions them to make sure they are upfront and honest with their customers about why they are raising their prices.

He urges consumers to shop around if they feel they are not being treated properly.

Meantime Federated Farmers electricity spokesperson Philip Yorke  says Thursday will be a black day for farmers.