The carbon tax is not totally to blame for higher electricity prices, gas and electricity supplier AGL Energy says as it calls for the deregulation of what consumers are charged.
AGL says the tax does contribute but the main driver of higher energy costs is the lack of state government spending on energy infrastructure, along with changed consumption patterns.
The company says electricity prices should be fully deregulated, so consumers could be charged according to the time of the day or night at which they use power.
"The carbon tax and the renewable energy target are often cited as the reasons for the increases in electricity prices," AGL chairman Jeremy Maycock said in the company's annual report released today.
"While it is true that both these items have added costs to the industry, they are secondary to the main drivers of higher costs: capital expenditure on electricity networks (particularly in NSW and Queensland)."
Mr Maycock said capital expenditure on electricity networks was now several times higher than in the 1990s, which partly reflected state government underinvestment in energy transmission and distribution infrastructure over many years.
It also reflected the pattern of increased peak demand for electricity in the early mornings and early evenings on hot days, even though total demand for power was falling as customers cut consumption because of higher prices.
Mr Maycock said this consumption pattern had led to the building of infrastructure that likely would be used just a few hours each year, that is, only at peak times.
Consequently, prices had risen as power companies sought to recover the cost of that investment.
"An alternative solution would be to fully deregulate electricity prices and allow energy retailers to offer competitive 'time of use' energy pricing," Mr Maycock said.
He said research indicated consumers would respond by reducing demand at peak periods.
Consumers unable to change their consumption pattern could be offered financial support to cope with the increased cost, he said.
Mr Maycock criticised energy regulators, saying that over the past 12 months, public policy development had deteriorated and there appeared to be no overall strategy or objective.
"Particularly concerning has been the unpredictable determinations of some state government regulators in the setting of retail energy prices, especially in relation to electricity," he said.
"Some regulators have responded to the large increases in electricity prices observed over the last three or four years by adopting short-term populist policies rather than deal with the real reasons for higher prices."
Mr Maycock said the result was regulators unfairly blaming energy retailers such as AGL for high prices.