'Demand reduction bidding' way of reducing power bills

Climate action spokesman Greg Hunt says a coalition government would limit power bill rises by abolishing the carbon and mining taxes as well as looking at incentives for so-called demand reduction.

Network costs are to blame for the significant increases in power bills over recent years.

Hunt acknowledged poles and wires had been "over built" to deal with the relatively few days of extreme energy use each year - for example scorching hot days when everyone runs air-conditioning.

"(But) you don't have to gold-plate, as it's described, if you build in the capacity to reduce demand on those days by striking agreements with large energy consumers (such as) supermarkets, which can power-down their large

refrigeration units on hot days and then do the cooling later on at night," he told ABC TV on Wednesday.

"Demand reduction bidding is an incredibly effective means of reducing the pressure on capital expenditure."

Hunt said such bidding would require a change to the current regulatory regime.

But he met with a major energy company last week to discuss such a mechanism.

Their view was that demand reduction could have a "double benefit" with positive outcomes for providers and consumers.

Hunt noted that demand reduction had been introduced very successfully in Western Australia but it hadn't been implemented on the eastern seaboard.

He also confirmed on Wednesday night that a coalition government "would merge the departments of climate change and environment".

It was revealed earlier in the day that NSW electricity prices are set to rise by an average of 18 per cent from July 1.

The state's pricing regulator blames the carbon tax for half the increase and the continuing escalation in network costs for the other nine per cent.