The Australian Energy Regulator (AER) says it can save an average Queensland household $40 a year.

The regulator wants to cut the transmission cost of electricity across the state, issuing a draft decision for Powerlink to reduce its revenue by 29 per cent from 2017 to 2022.

Powerlink– the Queensland Government’s corporation which owns, operates and maintains its high voltage electricity transmission network - had proposed a cut of 25.4 per cent.

AER Board member James Cox said it was fair.

“It balances the consumer interests — and it's important consumers get lower prices and they told Powerlink that and they told us that,” Mr Cox said.

“But it's also important they get a safe and reliable power supply. So we've achieved all of those things we believe.”

The AER says its draft decision reflects the revenue reductions sought by the networks, and included extra savings as a result of lower interest rates and other financial shifts.

If the AER’s call goes ahead, Powerlink would be able to recover $281 million less from consumers each year than it currently can.

“This translates to an estimated average saving of $40 per household in each of the next five years, relative to the existing level, as transmission costs account for around 9 per cent of the average Queensland customer's electricity bill,” Mr Cox said.

“The key difference between the proposal and the draft decision relates to the rate of return for the businesses to service interest on loans and provide a return on investment to shareholders.”

A final decision is expected in April next year.