State-owned energy giants in fed sights

The federal government has state-owned electricity giants in its sights as debate rages over so-called "big stick" laws to deal with misconduct by large power corporations.

The laws, which include penalties and the potential forced break-up of companies, are needed to ensure power retailers and generators do not make decisions which deliberately jack up the price of electricity, the government argues.

As he introduced the bill to the lower house on Wednesday, Treasurer Josh Frydenberg said the powers would help increase competition and ensure cheaper power prices for consumers.

The legislation creates three kinds of prohibited conduct for energy giants, which if breached, will see them hit with the "big stick".

The three areas under watch are retail pricing, the electricity contract market and wholesale market.

If found to be withholding savings to customers or preventing competition in the market, the draft laws give the ACCC the power to fine a company, apply for an injunction to stop the behaviour or alert the treasurer.

The treasurer could then apply to Federal Court to see that energy company sell off or separate its assets.

But Labor argues the bill will scare off investors which would inevitably lead to higher prices.

Labor leader Bill Shorten accused the prime minister of supporting the privatisation of energy companies, which has been a hot-button issue especially in Queensland.

"Why is he threatening Queenslanders with more privatisation and higher power prices?" Mr Shorten asked in parliament.

Scott Morrison said the Queensland government had been "dividend stripping" out of the electricity sector to prop up the state budget.

"They've been jacking up power prices to strip that money away from mums and dads and pensioners and small businesses and family businesses," Mr Morrison told parliament.

"If the leader of the Labor Party wants to talk about about the ownership of electricity assets in Queensland, he must take responsibility as the leader of the Labor Party for having a partnership with a Queensland Labor government happy to rip off electricity customers and put the money in their own failed budgets."

Earlier in parliament, Liberal National Party MP and former minister Keith Pitt said the "big stick" should be used immediately against the Queensland power companies.

"The moment that the big stick is in the holster and available I say to the minister get the big stick out and point it straight at Premier Annastacia Palaszczuk and the Queensland Labor government," he said.

Mr Frydenberg told reporters privatisation was not a plausible scenario.

"Where there are government-owned assets and if you went to the last resort, which was a divestment, that would be into another government entity that could compete," he said.

Labor finance spokesman Jim Chalmers said it was a "dangerous" policy.

"Queenslanders are being poked in the eye with the big stick," he said.

"The people of our states have said repeatedly that they don't want their public assets sold."