NSW, Queensland and Tasmanian residents pay between $100 and $400 more than they should each year in electricity bills to cover government overspending and "poor decisions", a report has found.

NSW residents should also be given a rebate to cover their excessive costs, the Grattan Institute’s report, released on Sunday, concludes.

Governments have invested in electricity grid infrastructure as the number of customers has grown in recent years.

Peak demand on the grid has grown along with the customers as has the use of air conditioning on hot days.

But “excessive expenditure” on the network since 2005 means many Australians “pay a lot more for their electricity than they should”.

Much of the investments appear to be over-valued or under-utilised – too expensive or too large.

In 2006 there was about $5000 of electricity infrastructure per NSW resident. But in 2016 that number had doubled in real terms.

Queensland had increased from $8000 to almost $14,000 in the same period and Tasmania also recorded an increase while other states only grew slightly.

At the same time, efficient appliances and solar panels were reducing demand on the grid.

That growth came at a price – paying for the overgrown network is the “single biggest contributor to bill growth over the past decade in NSW and Queensland,” the report says.

Despite NSW privatising much of the network in recent years, the institute warned government the issue could not be “swept under the carpet”.

The institute recommended the NSW government use the profits from the sale of the network to fund a rebate to customers.

It also recommended all other states privatise their networks “because the evidence shows that privatised electricity businesses deliver lower prices for consumers, without compromising reliability or safety”.

They also recommended showing consumers when demand was high because people were likely to reduce their usage at critical peak periods – lowering the cost of the network.

By Perry Duffin