Opposition Leader Tony Abbott is at odds with several of his frontbenchers over the causes of higher electricity prices.

Tony Abbott was accused on Thursday of ignoring facts for political gain after describing the energy regulator's position on what is driving power prices as a "furphy".

Mr Abbott said it was a fabrication for the Prime Minister to suggest power prices are rising because the states are over-investing in power infrastructure.

He says the carbon tax is to blame for rising electricity costs.

But Opposition energy spokesman Ian Macfarlane has admitted state government spending on the poles and wires of electricity networks has pushed power prices higher.

And the former opposition leader, frontbencher Malcolm Turnbull, agrees with that position.

"There is no doubt the bulk of the reason for the 50 per cent, or thereabouts, increase in electricity prices for example in New South Wales over the last few years has been because of investments in poles and wires basically in the transmission and distribution networks," he said.

Prime Minister Julia Gillard has threatened to take action against the states unless they bring down prices.

She says households have experienced 50 per cent price increases over the past four years, "linked to demonstrable inefficiencies in resource allocation in the market".

Ms Gillard received the backing of Australian Energy Regulator chairman Andrew Reeves, who agreed over-investment had pushed up prices.

"The price increases up to 1 July this year were substantially attributable to increasing costs of the network," Mr Reeves said.

'Absolute furphy'

However, speaking to the ABC Radio's AM program on Thursday morning, Mr Abbott again blamed the carbon tax for putting pressure on power bills.

"The problem is not the regulation of power prices. The problem is the carbon tax putting up power prices," he said.

"This is a fabrication by the Prime Minister. This is an absolute furphy from the Prime Minister.

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"Why should we believe the Prime Minister now about so-called gold plating of power infrastructure when she's never talked about it for the last five years?"

Mr Abbott defended investment in electricity infrastructure.

"It's very important that we have security of energy supply and I don't think any rational power supplier would be overdoing it," he said.

"They would be putting in as much investment as is needed to ensure that they properly do their job."

'Scaring the community'

Greens leader Christine Milne says Mr Abbott is the one making things up and is ignoring facts for political gain.

"The pendulum of credibility has swung to the red flashing emergency zone pointing straight at Tony Abbott," she said.

Senator Milne says Mr Abbott's tactics have been exposed.

"He doesn't care. He doesn't want to be across the detail. All he wants to do is try to get into power by scaring the community," she said.

Climate Change Minister Greg Combet agrees Mr Abbott is being deceitful.

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"What Tony Abbott said today about electricity price rises is a complete fabrication and a furphy and the Government has been talking about this for quite some time, but Tony Abbott just engages in deceit," he said.

"Here are some facts - over the last few years across the country, electricity prices have gone up by an average of fifty per cent, with nothing to do with the carbon price, in Western Australia in two years up 55 per cent, in New South Wales over three years up 55 per cent."

Ms Gillard says the rises cannot continue and has challenged the states to come up with ways of reducing power prices, or else.

"We won't lightly use the big stick of regulation, of stronger powers for the Energy Regulator and the ACCC, but it's a stick we hold and which we'll use if required," she said.