The Federal Government says it is cracking down on “sneaky” late power payment fees.

Late payment fees are charged by energy retailers to customers who have failed to meet discount conditions.

But Energy Minister Angus Taylor has asked the Australian Energy Market Commission (AEMC) to change the rules.

Currently, retailers often offer large discounts of up to 45 per cent off a customer’s bill if certain conditions are met, such as paying on time.

However, when a customer fails to meet these conditions, they are often charged hefty late payment fees and are faced with a significantly higher energy bill than expected.

The Australian Competition and Consumer Commission found on average one in four customers failed to meet the conditions to receive their discount. This figure increased to nearly 60 per cent for customers in financial hardship.

Mr Taylor has called for a rule change to limit conditional discounts for both gas and electricity retail offers to reasonable costs.

Under the proposed rule change, retailers would also be prevented from hitting customers twice with a late payment fee and withdrawing pay-on-time discount.

“This rule change will not only reduce confusion for families and small businesses but also enable them to make more empowered and informed decisions about their energy plan,” Mr Taylor said in a statement.