Consumers could be paid for reducing the amount of electricity they use to help the grid during peak demand in an industry change being considered by the market's rule maker.
The Australian Energy Market Commission is taking late submissions to the rule change, which is so far supported by the market operator, the consumer watchdog and the South Australian government.
But energy giants are opposed to the suggestion, with EnergyAustralia arguing retailers are best placed to deliver demand response to their customers.
"A demand response aggregator is likely to create inefficiencies and costs within the market that will be borne by customers," its submission says.
The Australian Renewable Energy Agency trialled demand response over the summer of 2017/18, finding that it creates a reliable source of capacity in wholesale markets under certain circumstances.
ARENA says the move could help prevent summer blackouts, envisaging households receiving a discount in their next bill or a cash bonus for reducing power use.
The rule change was requested by the Public Interest Advocacy Centre, Total Environment Centre and the Australia Institute.
A decision is expected in the middle of the year.
The Australia Institute's energy policy expert Dan Cass says reducing peak demand will help the grid operator and electricity networks provide a reliable supply.
"Demand response is cheaper, faster and more popular than building new generation to cope with peak demand pressures," he said.
"If the federal government is serious about underwriting reliable supply at the cheapest cost and getting it done quickly, then demand response will be part of the solution."
Meanwhile, a new report shows that households in Queensland, NSW, Victoria and SA could save hundreds of dollars each year if the government introduces a regulated retail price.
The joint report between the Australian Council of Social Service and the Brotherhood of St Laurence found that about half of Australia's households could save $300 to $420 a year under a "fair" regulated price.
Investing in energy efficiency and rooftop solar are other effective ways for the government to help reduce power bills, the report found.
