Australia's electricity retailers have lashed as "incredibly perverse" changes to the way people are charged for power that are leaving many with complex prices and higher bills.

In a damning submission to a review of smart meters, the Australian Energy Council called for a pause on the imposition — or "assignment" — of the complicated and often punishing tariffs they enable.

The broadside from the AEC, which represents companies including Origin, AGL and Alinta, is the strongest denouncement yet from retailers amid a growing split in the industry over the reforms.

It is a row that is pitting electricity retailers against regulators and network poles-and-wires companies, with consumers caught in the middle.

And it comes after the peak body for household and small business energy users took aim at the reforms, saying they did not work and only hurt ordinary people.

At the heart of the battle are smart meters, which authorities led by the Australian Energy Market Commission want installed on every home by the end of the decade.

The meters provide infinitely more data on how and when consumers are using electricity while allowing electricity companies to read those data remotely.

Key to a world of complexity

But the meters have also unleashed a wave of complex new power prices, which often-unwitting consumers are being forced to pay.

These tariffs are broadly known as cost-reflective prices and include time-of-use and demand charges, which typically slug customers more for power at peak times.

They differ from traditional flat-rate tariffs, which charge a consumer the same price for power no matter when they draw it from the grid.

Supporters including the AEMC argue cost-reflective prices make the electricity system more efficient by sending consumers price signals about when power is more expensive to produce.

These times are most commonly in the evening when cheap and abundant solar power has tapered off for the day and expensive options such as gas plants are required to fill the gap.

With those signals, backers say, consumers will be less likely to use power during peak times, reducing the need for costly upgrades of the poles-and-wires network.

But the AEC said the new tariffs were also consigning many consumers to higher prices.

"The AEC agrees that some customers face higher-than-expected bills after being placed on a new cost-reflective tariff structure," the council wrote in its submission to the AEMC.

"That is why the AEC finds it difficult to understand that the AEMC may be prepared to make a decision which it says 'may lead to an increase in retail price levels'.

As the ABC has reported, anger and alarm are growing at the spread of cost-reflective tariffs as more and more households are affected.

Data from the Australian Energy Regulator show almost 1.5 million homes across New South Wales, south-east Queensland and South Australia are being charged cost-reflective prices.

By comparison, barely 200,000 households were exposed just three years ago.

Tougher safeguards questioned

Under tougher safeguards proposed by the AEMC, retailers would be required to get "explicit informed consent" from consumers before putting them on a complex tariff.

At the same time, retailers would also have to provide a flat tariff as an option for households that did not want exposure to dynamic prices.

"We consider that enhancements to our proposed safeguards are warranted to protect customers from negative outcomes following the installation of a smart meter and to maintain social licence for the accelerated smart meter rollout," the commission has noted.

Faced with the backlash, retailers have tried to distance themselves from the reforms, instead blaming regulators and poles-and-wires companies.

According to the AEC, the real problem is "network tariff reassignment", which occurs when a home is fitted with a smart meter and the poles-and-wires company starts charging the retailer cost-reflective tariffs at the property.

The council said retailers had little choice but to pass on the changes, given network charges were their biggest expense and typically made up about 40 per cent of a customer's bill.

It said a failure to do so would force the retailer to lift the prices it charged other customers to compensate for the increased risk.

Besides, the AEC said it was disingenuous for regulators or networks to suggest retailers should shield consumers from cost-reflective tariffs when the whole point of the reforms was to send end users a clear signal.

"The benefits … in terms of reducing the need for additional investment only accrue when customers shift their behaviour at the right scale, at the correct location, at the right time and at lower cost than other network options."

Pointedly, the council argued that some types of dynamic pricing should simply be banned because they were "impossible to relate to".

Chief among them were demand rates, which charge customers based on their single biggest half-hour period of demand for power across an entire month.

Tariffs 'unreasonably' complicated

The AEC said such charges made a mockery of tariff reform, which it noted was based on an expectation that consumers be "reasonably capable" of understanding the prices they were charged.

"A demand tariff or other highly complex tariffs clearly fail this requirement," it wrote.

"This is especially true of demand tariffs, where consumers find out well in arrears of any demand reset."

The group said it still supported some form of dynamic pricing such as "simple" time-of-use tariffs, which charged consumers more for power during the evening peak and less at off-peak times.

And it said any consumer that wanted to opt into dynamic pricing should have the option, noting those able to take advantage of prices when they were cheap and avoid peak charges could benefit.

"Research reveals that active consideration of a complex electricity tariff is likely to be limited to a very small proportion of the consumer population," the lobby noted.

"Among the still smaller proportion who accept a complex tariff, their preference is an associated scheme such as automation that offers risk relief."

But it argued networks should be prevented from reassigning customers until problems with the reform process could be fixed.

"It is clear to the AEC that some consumers are expressing a clear wish not to be exposed to cost-reflective tariffs," it noted.

"The obvious answer to this is to prevent networks from reassigning customers to these network tariffs for a period following installation of a smart meter."

Networks and regulator defiant

The submission from the AEC follows a scathing report in August from Energy Consumers Australia (ECA), which it said may do little — or even nothing — to avoid network upgrades and cut costs.

In response to the latest criticisms, the lobby representing poles-and-wires companies stood by the need for dynamic prices.

Energy Networks Australia said flexible tariffs were vital for "reducing the need for future investments paid for by all customers".

And the group took a veiled swipe at retailers, suggesting they were not properly and promptly informing their customers about retail changes at the household level.

Corporate affairs general manager Emma Shanks said networks also undertook "comprehensive engagement" with retailers before setting tariffs.

"As the smart meter rollout continues, we support strong safeguards to ensure customers avoid bill shock from their retail charges changing without clear, timely communication," Ms Shanks said.

AEMC chair Anna Collyer said the regulator was trying to strike a balance between the rollout of smart meters — and the benefits it promised — and the protection of consumers from any downsides.

To that end, Ms Collyer said the commission had listened to the feedback from stakeholders and released tougher safeguards as part of its proposed rule changes.

"We heard increased stakeholder concerns about the impact of unexpected retail tariff changes, and we acted on this," Ms Collyer said.

"We have consulted broadly on this proposal, including through meetings, holding a public forum, and through stakeholder submissions to the directions paper.

"We are considering feedback from all stakeholders, including the AEC, as we progress toward our final determination which is scheduled for publication later this year.