Tasmanians' energy bills are set to rise by almost 12 per cent from July 1, adding to the rising cost of living.
The price hike equates to roughly $200 per household per year.
It comes just one week after the Reserve Bank lifted the cash rate by 50 basis points.
Meanwhile, inflation is sitting at 5.1 per cent and is predicted to hit 7 per cent by the end of the year.
State Energy Minister Guy Barnett acknowledged it was a tough time for Tasmanians and Australians.
"It's come at a very difficult time and a very challenging time for all of us across Australia," he said.
"In other jurisdictions, there've been increases of up to 21 per cent."
Mr Barnett said the government would respond to the power price hike by introducing a "winter energy assistance package".
"It will be targeted and supporting those Tasmanians most in need," he said.
The package will include a $180 discount for eligible electricity concession account holders — $61 of that was already budgeted for.
The energy saver loan scheme has also been boosted.
The scheme offers residential customers, landlords and small businesses an interest-free loan of up to $10,000 to invest in energy-efficient products to lower their electricity bill.
"It's a difficult time, that's for sure, and as a government we have always got at the forefront of our minds the ability to support those most in need and those doing it tough," he said
The majority of the electricity price increase in Tasmania can be attributed to wholesale electricity costs, which are 37 per cent higher in the 2021-22 financial year.
Tasmania joined the National Electricity Market (NEM) in 2006 when the Basslink undersea power cable to Victoria started operating.
Consequently, the wholesale price of energy in the state is heavily influenced by the national market.
Pressed on whether the state could disconnect from the NEM, Mr Barnett said on Friday it would have "unintended consequences".
"We need to remain in the National Electricity Market," he said.
Mr Barnett rejected the suggestion that being part of the NEM had caused the price increase in Tasmania, saying it was because prices had gone up across the country.
The government previously disconnected from the NEM between 2017 and 2020 by imposing a cap on wholesale rate increases, but recently abandoned that policy.
Opposition energy spokesman Dean Winter said the government let Tasmanians down when it refused to support a Labor bill to "de-link" from the NEM by capping the power price rise at 2.5 per cent.
"Tasmanian families are being really hard hit by the cost of living crisis.
"We don't think that they can afford to have a $227 increase in their power bill next year and that's why we tried to stop it."
Tasmania's economic regular Joe Dimasi told ABC Radio Hobart's Mornings program the cost of generating energy across the NEM accounted for nearly all of the increase.
"What we do is we look at the costs Aurora faces and we run the ruler through all of those costs and try to come up with a reasonable outcome and obviously make sure the price increase is absolutely no higher than it must be to cover those costs," he said.
But Mr Dimasi said Aurora could choose to absorb some of the cost.
"This is the maximum Aurora is allowed to increase its bills on average by," he said.
"They can't go above it. If they go below it, that's their call."
