Hundreds of thousands of households will face a rise of $600 a year on electricity bills under a new default market offer set by the energy regulator.

Customers in southeast Queensland, NSW and South Australia can expect an increase of between 19 and 25 per cent from July 1, depending on their locations.

Dutton said the government needed to do more to reduce the cost of electricity.

“We want to see more gas in the system because what the government’s doing here is turning off the old system before the new one is ready, and that’s what’s driving up prices,” he told Nine’s Today program on Friday.

“The government’s completely underestimated how much families and small businesses are hurting.”

Deputy Prime Minister Richard Marles said work was well under way to reduce power costs, including a larger investment in renewables.

He said interventions into the energy market had seen prices lower than what they would have been otherwise.

“We get that power prices going up are a real pressure on households and on businesses, that’s why we’ve been acting from day one in relation to this,” Marles said.

“At the end of last year, the energy price regulator was expecting power prices to go up by 50 per cent.

“This year, that’s not what’s happened – it’s much less than that.”

The energy regulator said high wholesale costs continued to drive up retail electricity prices.

Australian Energy Regulator chair Clare Savage said the agency considered the cost-of-living pressures faced by households and businesses when making its decision, as well as the need for retailers to recover their costs.

Education Minister Jason Clare told Seven’s Sunrise program energy relief measures would flow to households after the delivery of the federal budget.

“We know small businesses are doing it tough and that’s why the $500 we are paying off power bills is so important,” he said.

“What that means for households is that for five million homes around the country, their power bills will be less this year.”