Power prices have become a key political battleground, with accusations routinely thrown around about who is to blame for surging electricity costs.

The Australian Competition and Consumer Commission (ACCC) was tasked with analysing the market to identify the problems and suggest some solutions.

The ACCC's report has 56 recommendations aimed at fixing the mess.

They broadly involve consumer rebates and simpler discounts, tougher powers to prevent market manipulation and government support to encourage new entrants into the electricity generation business.

The regulator has held out the promise of big savings if its recommendations are adopted. Household bills could drop by up to 25 per cent on average, and for business, the saving could be even bigger.

"We are involved in this to help consumers get lower-priced energy and to help the economy have the energy prices it deserves," ACCC chairman Rod Sims said.

But not everyone agrees.

Danny Price, the managing director of Frontier Economics, has been involved in the design, operation and reform of the national electricity market for 30 years.

He has worked with governments, regulators and the private sector. He has witnessed at close quarters the bitter battles over carbon pricing, the Finkel inquiry and the National Energy Guarantee (NEG).

He sees the ACCC's Retail Electricity Pricing Inquiry as yet another set of recommendations which will prove counterproductive.

Mr Price believes the endless examination of Australia's energy market sends a message of disarray to investors, and the ACCC's report has reinforced it.

"It's a disgrace. It's a political document," he said.

"I don't think it's going to lead to lower prices. It's just going to lead to more intervention and a further retreat by investors from the market, the retail sector and networks.

"It's a very strange report in lots of ways."

Carbon-pricing confusion blamed for price hikes

While blaming the states and power companies for the country's dire energy predicament, Mr Price said the ACCC's report failed to consider the significant upheaval and uncertainty caused by Canberra's failure to agree on and implement a carbon-pricing policy.

He said many of the problems highlighted in the regulator's report leading to a lack of investment were logical market responses to the confusion over carbon pricing.

"The world would have been very different had we had a sensible bipartisan-supported, carbon-pricing policy years ago," he said.

"We would have had a much more orderly market. The market could have functioned in the way it was designed.

"We wouldn't have had the interventions from regulators. None of those things would have been required."

The ACCC wants to increase electricity supply by encouraging more investment in power generation from investors other than the dominant so-called "gentailers": AGL, Origin and Energy Australia.

It is difficult for investors to get bank finance for generation projects without secure long-term commitments from users.

Generators last for decades but their customers may be unwilling to lock in beyond five years.

'It completely underwrites coal-fired generators'

The ACCC wants the Federal Government to guarantee to pay $45-50 per megawatt hour of electricity during years six to 15 to help new entrants secure finance.

"We want new players in the market and competition is crucial," Mr Sims said.

"The players that have talked to us about this are gas and firmed-up renewables. No coal-fired player talked to us during our enquiries but we're technology neutral. Let the market sort it out."

But Mr Price said the ACCC was playing favourites and its call for government intervention to help secure finance for generators addressed the chief barrier to entry for a coal-fired generator.

"One of the problems they face is getting bank finance because of the risk of the introduction of carbon pricing," he observed.

"These aren't risks that renewable generators or even gas generators really face anymore and so it completely underwrites coal-fired generators."

Rod Sims rejected claims coal would be the only beneficiary.

"All technologies where you've got new players will benefit from what we've recommended," he said.

"This facility will help you get bank finance, but it won't underwrite the equity.

"So if you're going to invest in this you've got to take the equity risk. All this does is help you get bank finance by solving a market failure problem."

Mr Price is not convinced because, he argues, the equity and financing are connected.

"Banks don't lend for investments that don't achieve their equity returns," he said.

"Why would they? It's too risky. You can't on the one hand say it's supporting the business to get bank finance and say that it's not underwriting equity."

CLSA bank analyst Brian Johnson told the ABC the ACCC's report was unlikely to make it much easier for new coal-fired generators to get financial support from the big banks.

"Over and above the credit assessment of any participation by the banks they all have a strict carbon policy which will also see deals assessed within the constraints of those policies," he told ABC News.

"For example Westpac has a policy based on carbon emissions, which likely restricts its participation in carbon-emitting industries.

"Unless they change those policies it may be difficult to get financing from banks."

While Mr Price acknowledged that Australia's major banks would only lend for non-coal generators, he believes coal projects would still find support.

"There are many banks around the world that are still prepared to do that," he said.

"Particularly if they see the Federal Government throwing taxpayers' money behind a coal-fired generator.

"They'd be very happy, especially over the sorts of terms that the ACCC is talking about."

You can watch Phillip Lasker's story on The Business on ABC News Channel at 9:45pm (AEST).