Adjustments to the way the Australian Energy Regulator sets it prices should spell the end of massive spikes.

A raft of changes have been proposed on electricity and gas network spending and the Regulator’s cost of funding. It is the final part of reforms towards considering the cheapest way to ensure adequate energy supply, also encouraging people to reduce demand on the network through efficiency or generating their own electricity.

“Improved penalties and rewards mean consumers will not have to pay for excessive investment,” AER chairman Andrew Reeves said, “inefficient networks will face cuts to their proposed expenditure.”

The changes were brought about by the creation of new national gas and electricity rules at the end of 2012. When estimating, the cost of capital must now incorporate comparisons with “benchmark efficient entities” that have “efficient financing costs” under new guidelines.

Reports say regulators will take on the new rules by November 23.