The federal government has been accused of taking a “wrecking ball” to the economy with its carbon tax, after it was revealed household power bills in NSW could balloon by up to $380 a year.

The Independent Pricing and Regulatory Tribunal (IPART) on Thursday recommended an average price hike of 16 per cent across NSW.

The draft determination said half of the rise was due to the carbon tax, while the other half will pay for the rising costs of the network’s poles and wires.

“Both households and small businesses will be devastated by the proposed price rises, estimated to add $182 to $381 to the average household bill.”

The Public Interest Advocacy Centre (PIAC) said rural and regional customers would be the hardest hit.

“Energy consumers do not pay the same price for electricity across NSW but the rebate rates are uniform,” senior policy officer Carolyn Hodge said in a statement.

“PIAC is particularly concerned about people in rural and regional areas, who are paying approximately $600 per year more than the average Sydney household.”

CEO of NSW Business Chamber, Stephen Cartwright, said small businesses were in for a shock from July 1.

“Small business is already bearing the brunt of energy price rises to fund upgrades of the network because of the underinvestment in electricity assets,” he said in a statement.

“Now they are being slugged with a carbon tax… (when) the economy is fragile, consumer confidence is weak, the high Australian dollar is hurting exports and competitiveness (and) wages are rising.”

Of the state’s 3.2 million energy customers, Mr Hartcher said 900,000 “lower income families” would receive state government rebates to help fund the cost of the carbon tax.

“The message out to Julia Gillard is this: If you want to help the battlers of this state, if you want to help the mums and dads and the families who are going to have to pay more because of soaring power prices – you can,” he said.

“And you can do that by simply stopping the carbon tax.”

Climate Change Minister Greg Combet has previously said the overwhelming factors driving price hikes are state based.