• Energy Minister Josh Frydenberg says electricity prices are spiralling. (AAP)
Energy Minister Josh Frydenberg says the market is not working as it should, with electricity prices spiralling but little new investment in generation.
13 Aug - 11:06 AM  UPDATED 13 Aug - 1:26 PM

The Turnbull government acknowledges it needs to integrate energy and climate policy as it works on lowering household power bills.

Energy Minister Josh Frydenberg says the market today isn't working, with prices spiralling but no investment in new generation outside of wind and solar projects.

He and Prime Minister Malcolm Turnbull met electricity companies last week to discuss ways to help Australians save money on their household power bills.

The energy chiefs again made it clear to the government the underlying cause of the market woes was a lack of policy certainty to back new investment.

"If we're going to get more thermal generation into the mix then we have to look at all options available to the government," Mr Frydenberg told Sky News on Sunday.

"Once we have the level of investment certainty that we all want of our energy system going forward, then the market will be best placed to work out the role of a high-efficiency low-emissions coal fired plant or another form of gas generator or, indeed, a form of renewables with storage."

The government is still considering whether or how to adopt the clean energy target recommended by Chief Scientist Alan Finkel as a way to ensure affordable, reliable and cleaner power.

Mr Frydenberg couldn't say when it would have an answer on the way forward, noting the energy market operator would report on gaps in baseload power at the start of September.

"We do need a mechanism that integrates energy and climate policy," he said.

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