Australia's competition watchdog says the Queensland government should split its power generators and sell off some of the assets to cut down power prices.
But the state's Labor government says it is already doing enough to slash charges for businesses and households, claiming breaking up its assets would increase electricity bills.
A report from the Australian Competition and Consumer Commission recommends a major overhaul to the national electricity sector to bring down bills and restore consumer confidence.
It singled out the Queensland government, which owns two power generators.
"The Queensland government should divide its generation assets into three generation portfolios to reduce market concentration," the report says.
"Once created, the Queensland government should ensure that the three portfolios are separately owned and operated to maximise competition in the wholesale electricity market."
State Energy Minister Anthony Lynham dismissed the idea, saying public asset ownership had driven down costs.
"Selling assets hasn't worked in New South Wales and Queensland continues to prop up the National Energy Market," he said.
"And because we own the assets, we've been able to direct prices to be lower."
In Brisbane on Wednesday, Prime Minister Malcolm Turnbull said introducing more competition to the energy market was key to cheaper power, with or without privatisation.
"State government ownership is not necessary, it's a matter for the state government to determine," he told the Queensland Media Club.
"But the critical thing is to determine that there is real competition, and that the generators act responsibly and don't take advantage of the market power they have to game the system."
Power charges across the state have become a political football between the major parties, with the LNP claiming the Labor government is ripping off customers by pocketing huge profits through power sector dividends.
Liberal National Party Leader Deb Frecklington said the report supported the party's plan to split power generators if it wins the next election, but ruled out selling those assets.
The ACCC has also recommended the Queensland government stop over-investing in the energy sector, a move it says would save average households at least $100 a year.
Network investment has been largely driven by excessive reliability and a regulatory framework that favours the government at the expense of consumers, it says.
The recommendations have been welcomed by various consumer groups who say they would benefit low income earners.
Mr Lynham last month trumpeted a $20 annual power bill saving for regional families as the biggest in a decade.
Calculations released by the Queensland Competition Authority showed regional households would make a meagre saving when bills drop from $1542 to $1522, and from $2568 to $2482 for small businesses in 2018-19.
The Queensland government is working towards a target of 50 per cent renewable energy sources by 2030, while the LNP has thrown its weight behind coal as a long-term energy option.
