The federal government has announced regulations for a safety net on power prices in a push to reduce the cost of energy for consumers.

The Australian Energy Regulator’s draft determination on its Default Market Offer introduces a standard price from July for customers in NSW, South Australia and southeast Queensland.

The move will lower prices by up to $218 a year for residential customers, and up to $937 for small businesses.

Energy Minister Angus Taylor said that the figure ‘will also act as a reference price, requiring energy retailers to advertise their standing and market offers against a common price benchmark’.

The plan is pitched at those households who haven’t shopped around for the best deal and attacks what he refers to as a ‘loyalty tax’.

‘The customer is the best possible regulator of this market. For those who aren’t in that position we want to make sure they get a fair deal,’ Mr Taylor told reporters in Sydney on Saturday.

The Australian Competition and Consumer Commission (ACCC) welcomed the reforms ‘which will bring down electricity prices significantly for over half a million consumers and will help all other customers generally better to compare offers’.

AER Chair Paula Conboy said the determination addresses the ACCC’s findings ‘that standing offer prices are unjustifiably high and comparing market offers is overly confusing’.

The changes are similar to reforms recently brought in by the Victorian government, which will move households on standing offers to a new capped default price.

About 14 per cent of customers in NSW and southeast Queensland and about ten per cent in SA are on standing offers, according to the Australian Energy Market Commission.

Labor’s energy spokesperson Mark Butler accused the government of ‘playing catch up’ on policy recommended by ACCC in July last year and backed by the opposition in August.

‘The vast majority of Australians, who are on ‘market’ not ‘standing’ offers, won’t see any benefit from this announcement,’ he said.