Some households are being slugged with power bills 20 per cent above what they could be paying.
The consumer watchdog says some retailers are charging customers on market rates more than the regulated safety net offers used to protect disengaged consumers.
The Australian Competition and Consumer Commission urged households and small businesses to contact their energy company to find out if cheaper plans were available.
Roughly 90 per cent of residential customers are on market offers, which are advertised plans or a plan negotiated with the electricity provider.
The rest are on standing offer contracts, which kick in by default if a consumer does not select a plan or the plan expires and is rolled over.
The latter is covered by safety net regulation, which sets a maximum price that can be charged.
ACCC commissioner Anna Brakey said the watchdog had seen several letters from energy companies advising customers of price hikes on their market plans above safety net offers.
“We know that many Australians are likely paying more for electricity than they need to because their recently increased rates are higher than the safety net built into standing offer contracts,” Ms Brakey said.
"We are seeing evidence of a significant reversal in the role of the safety net price, which was designed as a maximum price to protect disengaged consumers but is becoming a cheaper option for many people.”
The ACCC has observed price hikes as high as 20 per cent above the maximum amount customers on default contracts can be charged.
But these instances are still fairly rare, with the ACCC finding around 90 per cent of advertised rates were below the reference price.
A body representing electricity retailers said the few market offers above the regulated price were a reflection of the true cost of contracts and supplying electricity.
The head of the Australian Energy Council, Sarah McNamara, welcomed the ACCC's call to shop around for a better deal.
“Your retailer cannot just switch you to a new market deal because there is a need for the customer to give their informed consent to any changes, which is why if you think you should be on a better deal you can ask your retailer or compare the market deals," she explained.
Energy Consumers Australia was concerned to hear some retailers were lifting prices above the ceilings set by energy regulators.
"Consumers should ask their retailers if they are on the best arrangement for them and they have the right to ask for help if they can’t pay their bills – and retailers have an obligation to provide assistance," interim chief executive officer Jacqueline Crawshaw said.
Research by the organisation found 52 per cent of households were more worried about having the cash to cover their next energy bill compared to a year ago.
She said households on low incomes may also be able to get government concessions and advised struggling households to check their eligibility.
