A consumer watchdog has claimed the average south-west householder in the Powercor distribution network had to fork out an extra $170 last year after prices rose by seven per cent.

Cost-of-living pressures are set to continue this year, with the average bill expected to jump by another $286, not taking into account some promised government compensation once the carbon tax is introduced.

The study by power industry monitor GoSwitch has found residents in Powercor’s west Victorian zone will be hit by some of the highest power bills in Australia this year.

GoSwitch chief executive Ben Freund urged south-west householders to shop around for the right electricity retailer and claimed many settled for wrong deals. He said electricity prices had soared due to a number of factors, including renewable energy targets and upgrades to inadequate infrastructure.

“For years, many state governments have let investment in their power grids slip because it was the easy option,” Mr Freund said.

“Now we are being hit with the repercussions of delayed action.

“The renewable energy target has also been lifted from 10 to 20 per cent in recent times which means greater investment in wind, solar and related energy sources but also increasingly high power bills for the average customer.

“The federal government’s carbon tax will also add costs which will be passed on to households but we won’t be able to see the full effects until mid-year,” Mr Freund said.

GoSwitch’s latest price report showed Powercor increased its annual bill from $2217 in January 2011 to a projected $2387 this month, making it the third costliest distribution network nationwide.

Only South Australia’s state-owned electricity grid ($2704) and rural NSW network Country Energy ($2702) charge their customers more than Powercor, based on default rates.

Regional Cities Minister Denis Napthine said the federal government’s carbon tax would place greater pressure on the average householder’s budget once it was introduced in July. He said a balance needed to be struck between integrating renewable energy production and maintaining satisfactory power costs.

“The federal government’s carbon tax is going to hit south-west families really hard at a time when the cost of living is already rising,” Dr Napthine told The Standard this week.

“(In relation to renewable energy) there is still a need to diversify.

“Wind energy, wave energy are significantly more expensive than brown coal from the Latrobe Valley so we need to keep some form of balance.”

Nationwide data compiled by GoSwitch showed electricity prices had dramatically out-paced the Consumer Price Index (CPI) during the past five years.

Since 2007, the CPI has risen by roughly 15 per cent while the cost of power had blown out by 70 per cent during the same period.

Powercor was unable to be contacted for comment.