The capping means real prices will fall about 10% over the period if inflation stays at 3%, according to the West Australian newspaper.

Energy Minister Alan Carpenter agreed to the price cap, which the opposition Liberal Party demanded as a condition for its support for breaking up Western Power.

Parliament is expected to vote early next year to divide the utility into generation, retail, networks and regional delivery units.

Western Power controls 60% of the state’s power generation capacity and has annual revenues of about $1.8 billion.

Current budget allocations for the utility, which recently received $500 million to upgrade its networks, did not include increasing tariffs, Carpenter said.

But he said it was unlikely the cap would be written into legislation.

Carpenter said legislating the price freeze would be too messy but voters would hold the government to its pledge.

The government has not agreed to the opposition’s other demand that Western Power be allowed to keep its profits for reinvestment rather than paying them as state dividends.

But the opposition indicated it was ready to cooperate with the government in approving the break-up.

Carpenter and opposition energy spokesman Dan Sullican agreed that reforming Western Power and increasing competition would drive down power prices.