Australia's consumer watchdog is accusing state and territory governments of price gouging when it comes to supplying households with electricity.

Key points: ACCC accuses state governments of price gouging amid energy affordability inquiry

ACCC accuses state governments of price gouging amid energy affordability inquiry Scott Morrison says states and power companies should count themselves on notice

Scott Morrison says states and power companies should count themselves on notice SA Premier Jay Weatherill says government is out of touch on renewable energy

The Australian Competition and Consumer Commission says the states have been focused on making as much money as possible from their energy businesses at the cost of their citizens.

Chairman Rod Sims said governments have been behind increasing power prices, which have risen steadily in recent years, with no regard to making it affordable.

"It happened because a whole lot of policy changes have been made and people have really had no regard to the affordability of electricity," Mr Sims said.

The ACCC is running an inquiry into energy affordability and so far has laid a level of blame on the states.

"About 10 years ago [states and territories] deregulated or very much loosened the monopoly poles and wires businesses," he said.

"That pushed up the costs of the poles and wires, and that's 50 per cent of your bill. That almost doubled the poles and wires costs alone.

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"If [companies'] electricity cost is 5 per cent of their bill, and it goes up for 50 to 80 per cent, that can wipe out their profits and potentially put them out of business."

According to Mr Sims, the behaviour of state and territory governments is price gouging.

"I think there's been too much focus on state governments maximising the revenue from their energy business and not giving a thought to affordability," he told AM.

"I'm afraid I am [saying they've price gouged their citizens]."

Federal Government out of touch on energy: Weatherill

Federal Treasurer Scott Morrison agrees something needs to be done and states and power companies should be held accountable.

"I won't stand by and let energy retailers and rogue state governments take advantage of Australian families by seeking to play the energy market and pull the wool over their eyes," Mr Morrison said.

Mr Morrison is at odds with SA Premier Jay Weatherill on the issue following Mr Weatherill's recent deal with Tesla boss Elon Musk to build the world's largest lithium ion battery in the state.

"Thirty thousand South Australian households could not get through watching one episode of Australia's Ninja Warrior with this big battery, so let's not pretend it's a solution," Mr Morrison said.

But Mr Weatherill hit back at Mr Morrison's comments, saying the Treasurer is out of touch with the country's energy responsibilities.

"Renewable energy is the future — the big game changer is storage," Mr Weatherill said.

"Grid level storage represented by the world's biggest battery, which will be built in this country, is something that [Mr Morrison] should be proud of on behalf of all Australians."

As for the question of state governments price gouging their citizens, Mr Weatherill said he agrees with the ACCC's stance to an extent.

"Well for those states that own their own energy system I suppose that's fair, but most states don't now — they've been privatised some time ago," he said.

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"But the real question is that large power companies are exercising monopoly power, and that's what his concern is, and we agree with that analysis."

The Premier said the closure of coal-fired power stations meant South Australia had lost approximately 5,000 megawatts of installed capacity.

"Because there's been no national coherent framework which integrates climate change policy and energy policy existing at a national level, nobody's going to make these 20- to 30-year investments," he said.

"So essentially you get power concentrated in a few hands and they use that power to gouge customers."

The ACCC is expected to deliver a preliminary report on electricity prices by the end of September, with the final report due mid-next year.