Victoria's households could see power prices fall further than expected with the Victorian government throwing its weight behind a push by the industry regulator to force through price cuts, while it has also called publicly for changes to the way power prices are fixed.
Electricity and gas distributors such as Powercor, Citipower, United Energy and Jemena have launched legal action aimed at restricting the extent of price cuts that could flow through to households over the next few years.
Earlier this year, the Australian Energy Regulator decided to limit planned spending by the companies, which will see the annual household power bill decline by as much as $120 over the four years to 2020 when compared with 2015.
However the power companies have launched a legal challenge to the regulator's decision, specifically over its assumption of future rates of inflation and a technical issue relating to tax credits.
Now, the state government has decided to back the regulator while separately pushing for the state and federal governments to limit the way power companies can challenge pricing decisions they dislike.
"The time has come for the COAG Energy Council to properly evaluate the appeals process to consider whether it is working in the interests of consumers," Victorian Minister for Energy, Environment and Climate Change Lily d'Ambrosio said.
"The current system is very complex and results in a lengthy and costly process which ultimately disenfranchises and penalises hard-working Victorian families."
Even though the AER's recently released final decision follows an earlier interim decision that was issued several months ago, the legal challenge launched by the power companies will not be heard until November, with a decision not expected until sometime in 2017.
At a preliminary hearing before the Australian Competition Tribunal on Tuesday, the Victorian government said it would be putting forward a submission in coming months.
Between 2008 and 2012 the electricity network companies charged households an additional $3.3 billion following successful legal challenges to regulator pricing decisions, Ms d'Ambrosio said, with the regulator moving to cut $350 million off their planned spending over the next few years.
A meeting of federal and state energy ministers is to be held later this month.