Tripling the brown coal royalties paid by power companies in Victoria will lead to higher household electricity bills and the state government is mad to think it won't, the opposition says.
The Victorian government plans to increase the brown coal royalty rate three-fold as part of its upcoming budget, with the increase to take effect in 2017 and expected to raise $252 million.
"Power companies can easily absorb this change, and there is no reason for it to be passed onto consumers," Treasurer Tim Pallas said on Saturday.
Increased royalties will have a "modest" impact on the industry's ability to produce energy, he said.
But opposition leader Matthew Guy says it's foolish to think power companies won't pass on the added cost of doing business.
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"This is Daniel Andrews' very own carbon tax," he told reporters.
"For anyone to believe power companies won't pass on a price rise to consumers when they're faced with increased taxes - that is just mad."
The government says Victoria's royalty rate has not changed in a decade, and the increase will bring the state in line with New South Wales, Queensland and Western Australia.
