Energy Minister Chris Bowen has rejected a suggestion from energy companies of a shift in the sector away from increasing profit margins.

The companies have written to the Australian Energy Regulator saying there has been a move away from supporting profit margins, which has made the retail market unattractive for investment.

The submission by the Australian Energy Council, which represents major providers, was made before the regulator determines its default market offer. It will set energy price caps for consumers, and will come into effect from July.

The submission said that while the regulator needed to find a balance for consumers to be protected from unreasonably high prices, providers were being affected.

“The AEC considers that in recent years the pendulum has swung well away from supporting reasonable and efficient margins and that the retail market is becoming increasingly unattractive as a site for equity investment,” it said.

But Bowen said he did not want to see excessively high power prices for consumers.

“I don’t agree with any arguments to say energy company profits should be prioritised,” he told ABC Radio on Thursday.

“Of course we want profitable energy companies, but we want families receiving cost-of-living relief as well.”

Bowen said the regulator was considering a range of factors before its draft decision on the default market offer. It will be released in February.

He said the priority for any decision for the default offer should be the effect on consumers.

“Energy company profits have been healthy, and I think in this spirit, in this environment of cost of living pressures, it’s quite right that the Australian Energy Regulator would prioritise the cost of living,” he said.

“[Companies] are entitled to try and maximise their profits … but consumers are entitled to be prioritised in the Australian Energy Regulator’s determinations.”

-AAP