Although the practice does not normally affect day-to-day electricity prices, it does push up averages prices, causing a higher base for long-term hedging contracts, thereby threatening to increase retail tariffs.

Average costs of generating electricity are $40 a kilowatt/hour and some generating companies have taken advantage of the national electricity market rules by withdrawing capacity at peak periods and re-bidding to supply electricity at up to the maximum approved rate of $10,000 a kw/h.

The new rules are intended to ensure electricity generators act in good faith when they bid or re-bid for the supply of electricity to the national grid.

Some industry experts believe unscrupulous behaviour such as withholding capacity and high bidding prices caused the electricity markets in Britain and California to spin out of control, resulting in power shortages and blackouts.