A company that told WA home owners they faced 20 percent increases in electricity prices because of the carbon tax has been caught out by the competition watchdog.

Polaris Solar and ACT Renewable Energy spread hundreds of thousands of advertising leaflets across WA and the nation's capital between October last year and February this year.

In the leaflets, readers were told that buying solar panels would help offset a 20 percent increase in power prices caused by the carbon price alone.

The leaflets also warned that by 2019 electricity prices would increase by more than 400 percent.

According to the ACCC, the advertisements represented the increases in prices as being based on independent studies, rather than unverified claims.

The action follows complaints about Brumby's Bakeries and an internal memo encouraging franchise operators to blame price increases in June and July on the carbon tax.

ACCC acting chairman Michael Schaper said it was clear the leaflets had misled potential customers.

"The ACCC is of the view that these representations were clearly misleading. There was no reasonable basis for these claims to be made," he said.

Polaris Solar and ACT Renewable Energy, Dr Schaper said, had fully cooperated with the ACCC.

Both had offered to not engage in similar conduct in the future, while ensuring all of its directors attend training about Australian Consumer Law.

Dr Schaper said if a business claims a potential price increase is linked to the carbon price, the claim had to be truthful and have a reasonable basis.

"Businesses must be careful in relying on unverified statements by third parties, including those made in newspaper articles and advertisements about the impact of the carbon price, as a basis for their claims," he said.

The West Australian

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