Australia’s peak energy body has backed Tony Abbott despite doubts over the prime minister’s promise that household power bills will fall with the abolition of the carbon tax.

The Energy Supply Association of Australia (ESAA), which represents major suppliers and retailers across the nation, says savings from scrapping the tax will be passed on to electricity and gas consumers.

"Just as the carbon tax increased power prices when it was introduced in 2012, they will fall once it is removed," Association boss Matthew Warren said in a statement on Wednesday.

However, the ESAA stops short of reassuring households electricity costs would fall by nine per cent and gas prices by seven per cent - as Mr Abbott claimed during the election campaign.

The Australian Industry Group (Ai Group) warns consumers are unlikely to see an immediate change in prices because it would take time to unravel the carbon tax at the business level.

"The proportionate impact of removing carbon costs will likely not match the impact of their introduction," Ai Group said in a submission to the government carbon tax repeal taskforce.

Mr Abbott has flagged a $550 per household saving on utility bills but the federal opposition says the government may not deliver on promises to consumers.

"Very serious doubts are already being cast by electricity companies and many other businesses about Tony Abbott's reckless promise that he'd be able to cut power bills for millions of households," opposition climate change spokesman Mark Butler told ABC Radio.

Treasurer Joe Hockey says there was no uncertainty about the price effect of scrapping the tax.

"Electricity prices will go down as a result of the abolition of the carbon tax, there's no doubt about that," he said in Sydney.

But Mr Hockey did concede businesses which hadn't already passed on expenses related to the carbon tax were likely to try and recoup the money at some point. This would most likely be done by increasing consumer costs.

The coalition government will introduce legislation to repeal Labor's carbon pricing regime in federal parliament next week.

The bills will have a smooth passage through the lower house but face hurdles in the Senate, where Labor and the Australian Greens are expected to reject them.

The government may have to wait until after mid-2014, when the conditions in the Senate may be more favourable.

Meanwhile, the Greens want a Senate inquiry into the government's alternate Direct Action climate plan to investigate its capacity to cut greenhouse gas emissions.

"Everyone knows the Direct Action plan is just a sham designed to hide the government's climate denialism," Greens Leader Christine Milne said.

  • With the risk of incurring the wrath of those less well off than myself, why do we get excited about saving less than $1.50 per day – which let’s be honest isn’t going to get you much – at the expense of the planet?

  • I wouldn’t trust an industry group that is as self serving as the energy industry. Any reduction would be temporary and the increased costs through rising prices and network charges will far outway any temporary reduction in bills within the next 1-2 years from introduction.

    The Carbon Tax should be replaced with a emissions trading scheme rather the useless direct action plan which will only serve to reduce the carbon emmissions of a few who would get grants and lead to no change at all by other businesses unless they get a grant!

    Direct action will not be able to control the growth in carbon emmission of Australians and business and just because you plant a million trees does not negate the effects of building a new coal fired plant or continuing to allow business to utilise inefficient, costly and polluting machinery.

  • This is a joke right, no chance, get ready for things like, oh we need to spend more on infrastructure etc. etc.

  • Not only will energy bills get cheaper, i think, especially in the Eastern States they could get significantly worse come 2015. With Gladestone coming online most of the CSG gas being extracted will be given to this project, leaving a gaping hole in the domestic gas supply. There will just not be enough gas, and you can believe the gas which is allocated to the domestic market will be ridiculously expensive.
    Unless something is done now energy bills of $2,500 per quarter will be all too familiar for many households.