POWER bills are set to skyrocket by more than 20 per cent, adding hundreds of dollars to the average annual electricity bill.

The Courier-Mail can reveal the the Queensland Competition Authority will recommend a 21.4 per cent increase in power prices in 2013/14.

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The increase would add $428 to an annual power bill of about $2000.

The Newman Government will later today reveal how it plans to reduce the impact of the massive power price hike after promising an era of cost of living relief.

Treasurer Tim Nicholls said the determination was a draft and the government did not want households "kicked in the guts".

"We will be looking at how we can best help Queenslanders deal with this increase," he said.

Investment in the power network, solar subsidies and the impact of last year's price rise which was covered over by a cap will be blamed for driving up electricity costs.

There is little change in the cost of actually producing the power.

A major increase in daily fixed fees in exchange for the rate of growth in the per kilowatt hour price will form part of the solution.

This change in the structure of power prices will hit small users like pensioners and holiday homes but could provide bigger households with some relief.

Earlier today, The Courier-Mail revealed a combination of factors would be blamed for the hike, including the ongoing investment in the distribution network, subsidies for rooftop solar systems and the carbon tax.

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It is expected the Newman Government will attempt to tackle the increase, which is yet to be detailed, with a raft of actions, including reducing the requirement to build duplicate backup infrastructure.

After promising to deliver cost-of-living relief at last year's election, the price rise will put pressure on Premier Campbell Newman to deliver long-term relief from skyrocketing electricity costs.

However selling off assets has been ruled out as an option until after the next election.

The Government will also maintain the lucrative 44c feed-in tariff for some solar consumers, despite the generous impost being passed on to all other households.

Lifting last year's election price cap on tariff 11 will cost the average household about $120 per annum.

The QCA determines electricity price hikes according to many factors, including information supplied by retailers. Today's announcement by the QCA will be the first in a new three-year arrangement to control the state's prices.

Debate remains over Queensland's decision to regulate prices. Victoria's prices are not regulated and evidence shows that customers there pay less or the same as Queenslanders.

Origin Energy managing director Grant King yesterday criticised Queensland's system, claiming the regulated prices were effectively shutting out small energy retailers.

"People might move (electricity retailers) for $100, but they won't generally move for $50 or $25 or nothing," Mr King said. "So it is a reverse logic because the price regulation sets a cap, but if the cap is too low there is not enough room to compete."

According to a report by the Australian Energy Regulator, three retailers - AGL, Origin and Energy Australia - jointly supply 76 per cent of customers.

Last year, Origin went to court to argue that QCA had set the price too low.

Premier Newman reacted strongly last winter when Origin challenged the QCA determination, urging government departments to shop around the retailer for a better deal.

Origin reneged and the Supreme Court later upheld the QCA's decision-making process.

On Friday morning, Queensland's Treasurer slammed the proposed double-digit electricity price hikes as "unacceptable" and blamed "bad decisions" by the former State Government, and the Federal Government.

Speaking on ABC Radio, Tim Nicholls said the Federal Government had permitted its regulator to allow "overinvestment in poles and wires" which made up 60 per cent of the increase.

He said the second largest component of the increase was the "very poorly thought through solar scheme" which gave people who could afford green energy systems enormous payouts.

"Four years ago about 2000 people had solar, that's now heading towards 200,000 and that energy is being redirected back into a system that has to be upgraded in order to take it," Mr Nicholls said.

"Nonetheless, people who have solar need to have power from the generators because they turn on most of their power after six o'clock at night when the sun goes down. It is an idiot cycle that hasn't been properly thought through."

Mr Nicholls said they were still waiting to see the determination being released by the Queensland Competition Authority.

"When it comes through, we'll be looking at the determination to see what assistance we can provide to Queenslanders to help them deal with what is unfortunately a legacy issue from past bad decisions made by both the former State Government and the Federal Government," Mr Nicholls said.

Additional reporting, Robyn Ironside

Originally published as Power bill pain set to shock