Watchdog warning on carbon tax price cuts

The consumer watchdog has warned businesses of "serious penalties" if price cuts from the carbon tax repeal are not passed on.

The Australian Competition and Consumer Commission has extra funding and toughened powers to act against businesses which supply electricity, gas, refrigerant gases and equipment such as refrigerators and air-conditioners which do not pass on savings.

"The ACCC will be keeping a close eye on prices to make sure that all cost savings go to consumers," ACCC chairman Rod Sims said on Thursday, just hours after parliament abolished the carbon tax.

There are court-imposed penalties available of up to $1.1 million for a corporation or $220,000 for an individual.

The court can also issue injunctions or declarations, make compensation orders or orders setting the maximum price of a good or requiring the supplier to pay refunds to consumers.