The High Court has backed the Electricity Authority's decision to cut wholesale electricity prices that spiked to more than 200 times normal levels last year.
Prices spiked to nearly $20,000 a megawatt hour in the North Island during a scheduled maintenance outage in March 2011.
This caused an outcry among some power firms, prompting the Electricity Authority to declare an undesirable trading situation.
But Genesis Energy, Todd Energy and Contact Energy took the matter to the High Court, arguing the authority's decision rewarded bad business practice.
A copy of Justice Ronald Young's decision obtained by Radio New Zealand shows a number of factors led to the price spike.
Justice Young says the Electricity Authority was right to have declared it an undesirable trading situation and a threat to the integrity of the wholesale electricity market.
He also says the Authority was right to lower prices from $20,000 to $3,000 a megawatt hour.
Justice Young dismissed assertions by Genesis Energy, Contact Energy and the Todd Energy-owned Bay of Plenty Energy that the move punished firms with hedging in place, because the vast majority of market participants did not foresee the high prices.
The Electricity Authority is not commenting until the decision is officially released by High Court.
Genesis Energy says it is reviewing the judgement and conferring with its coappellants before deciding its next move.