Meridian Energy is replacing two of its transformers at its Manapouri power station after finding a fault with cooling units.
"The problems with the coolers were detected early enough and action taken before an electrical fault occurred that could've resulted in a transformer fire," a spokesman said.
The failure of the coolers meant that the tubes winding around the two affected transformers were contaminated with a small amount of metal particles, the company said.
"Meridian always takes a conservative view to management of risk at Manapouri and on discovery of the fault with the coolers decided to remove these two transformers from service. The reason for this is that technically there is always a risk of fire with transformer failure," said the spokesman.
The tube coolers are double skinned and alarmed to ensure that oil does not leak into the cooling water and equally to prevent water from getting into the transformer.