Australia's biggest carbon emitters are being accused of passing on the entire cost of the carbon tax while pocketing government compensation.
Analysis by consultants Carbon and Energy Markets suggests that brown coal power plants in Victoria's Latrobe Valley could get billions of dollars in compensation over the next few years.
Director Bruce Mountain says some are passing on more than 100 per cent of the cost of the tax, meaning the government compensation amounts to windfall profits.
"It seemed to be more than 100 per cent for the case of some generators," he said.
"Not terribly much more, but it was slightly more for some and close to 100 for others." The report says the brown coal power generators are set to reap between $2.3 billion and $5.4 billion profit from the compensation package.
The conclusion is based on wholesale spot prices for the first six months of the carbon tax, compared to pre-carbon tax prices.
But Mr Mountain says he cannot be certain about the conclusions because they are based on a number of assumptions about the future carbon price and its effect on generators.
Paying twice? The report was commissioned by not-for-profit green group Environment Victoria.
Campaigns director Mark Wakeham says consumers are paying while the Government props up the dirtiest form of electricity generation.
"It appears that households might be paying twice for the carbon price," he said.
"They might be having the carbon price passed on to them by generators and retailers and are also paying in the form of tax transfers to the companies that own these power stations," he said.
In September last year the Federal Government abandoned plans to pay some of Australia's dirtiest power plants to shut down, saying the companies were asking for too much.
Mr Wakeham says this report shows why.
"It was never going to work, that you could pay them to stay open and pay them to close at the same time," he said.
"We're calling for the Federal Government to review the compensation payments to generators ahead of the federal budget and well ahead of the next scheduled payments on September 1, when more than $1 billion would be gifted to the owners of the most polluting power stations in the country - unless there is a review and a change to that status quo." Findings rejected The Federal Opposition's environment spokesman, Greg Hunt, agrees with the report's conclusion.
"This isn't a tax which robs the rich to give to the poor.
This is a tax which robs the poor to give to the rich," he said.
But Climate Change and Industry Minister Greg Combet says the report's findings are wrong.
"We simply don't agree with this analysis.
In fact, it's partial and incomplete analysis, in the scrutiny we've been able to give it so far.
We were only provided the report yesterday," he said.
"The development of the carbon price package and the energy security fund from which payments for the generators are made - that was the result of years of work, including very careful modelling, including private sector agencies that are experts in energy market modelling.
"Some of the wholesale price outcomes that have been witnessed since the carbon price came into place by the Australian energy market operator simply don't accord with the findings in this particular report.
"So we think there are errors in it." He says the Government's analysis is based on energy market behaviour data that is available to experts in the field.
"Just because Environment Victoria, which is opposed to brown coal generation, puts out a report on the same day Senator Milne is at the Press Club doesn't mean that the Government should be taking full account of a report that appears to be deficient in a number of respects," he said.