This is the shocking graph showing how Australia electricity bills have surged during the past decade to significantly outpace inflation.

The Australian Competition and Consumer Commission calculates electricity prices have soared by 56 per cent since the 2007/08 financial year, with households paying an extra $538 a year in bills to fund green schemes.

Generous solar panel subsidies and the 'gold plating' of transmission networks by privatised electricity companies to prevent blackouts have resulted in Australian consumers paying some of the world's highest power prices.

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This is the shocking graph showing how Australia electricity bills have soared during the past decade to significantly outpace inflation

Business analyst IBISWorld has released a graph showing how electricity prices began outpacing inflation in 2008 as generation, transmission and retail margins soared.

'Australians pay some of the highest energy costs in the world, despite having an abundant supply of coal, natural gas, wind, and solar capacity,' senior analyst Jason Aravanis said.

'In recent years, South Australian consumers have paid the highest average price in the world for electricity.'

The ACCC calculates that electricity users who don't have solar panels are paying $538 a year more for their electricity as they subsidise Australians who are benefiting from green schemes.

Rooftop photovoltaic solar panels typically cost about $6,500 to install, with those fortunate enough to afford them receiving financial help from their poorer neighbours.

Under a feed-in tariff scheme, households are given generous rebates from their electricity provider for putting energy back into the grid, with utility companies passing on these costs to consumers.

Households are given rebates from their electricity provider for putting solar energy back into the electricity grid. The ACCC said it was unfair for power companies to pass these costs on

The competition regulator said it was unfair that consumers without solar panels were paying a third more a year on their power bills to subside those with household renewable energy.

'Solar customers are paying, on average, $538 per year less than non-solar customers, suggesting that affordability concerns are most acute for those customers who have not (and possibly cannot) install solar PV,' the consumer regulator's Retail Electricity Pricing Inquiry report said.

The ACCC is recommending state governments fund premium solar feed-in schemes instead of leaving electricity users to foot the bill.

It praised the Queensland Labor government's approach and said other states should copy this policy on a 'permanent basis' as solar scheme offers finished.

An over-investment in 'gold plating' transmission networks to minimise the occurrence of blackouts was blamed for surging power prices.

'Increased expenditure on networks was driven by reliability standards for some networks that were set too high, without due regard for consumers' willingness to pay for marginal increases in reliability,' the ACCC said.

State governments, which during the 1990s began privatising electricity transmission and generation companies, also had 'limited ability to constrain excess spending by network owners'.

The ACCC also blamed bad regulation and market concentration for adding 'significant costs to electricity bills'.

The Australian Competition and Consumer Commission calculates electricity prices have soared by 56 per cent since the 2007/08 financial year

Prime Minister Malcolm Turnbull has promised to implement the recommendations of the report, which criticised a system whereby solar energy users are charged a different rate by their electricity provider for the renewable power they generate.

SolarQuotes, a small business which installs solar panels, said they typically cost $6,500 to install to generate three kilowatts of power, or roughly a fifth of the daily electricity use in a typical Australian house.

It calculated annual savings of $650 for power generated by sun energy.

Australian households spend about $1,700 a year on electricity bills, in New South Wales, Victoria and Queensland, consumer information group Canstar estimated.

Across the national energy market, the ACCC calculated that an average customer paid about $1,636 a year for electricity from the grid.

The federal government's Australian Energy Regulator estimated residents in a three-bedroom without a pool would use 14.8 kilowatt hours of power a day.