Some households are being slugged with power bills 20 per cent above what they could be paying.

The consumer watchdog says households and small businesses should contact their energy company to find out if cheaper plans are available.

Roughly 90 per cent of residential customers are on market offers, which are advertised plans or a plan negotiated with the electricity provider.

The rest are on standing offer contracts, which are given by default if a consumer does not select a plan or the plan expires and is rolled over.

The latter is covered by safety net regulation, which sets a maximum price that can be charged.

ACCC commissioner Anna Brakey said the watchdog had seen several letters from energy companies advising customers of price hikes on their market plans above safety net offers.

“We know that many Australians are likely paying more for electricity than they need to because their recently increased rates are higher than the safety net built into standing offer contracts,” Ms Brakey said.

“We are seeing evidence of a significant reversal in the role of the safety net price, which was designed as a maximum price to protect disengaged consumers but is becoming a cheaper option for many people.”

The ACCC has observed price hikes as high as 20 per cent above the maximum amount customers on default contracts can be charged.

Firms are not obliged to move customers onto the standing offer if it rises above the safety net price.

“The government safety net price for electricity is there to protect you, and you should not be paying more than it,” Ms Brakey said.

She said swapping energy companies to get a better deal may not be necessary.

The easiest option is to call an existing provider to ask how the plan compares with the regulated price.

But she also said loyalty could be costing households and businesses, with the best deals typically reserved for new customers.

“We know many Australians are currently struggling with high energy prices and broad cost of living increases, so it is worthwhile to set aside some time this week to call your energy company and ask if a cheaper plan is available.”

– AAP