Victorian and Tasmanian households and businesses could face higher power bills as soon as July unless the federal energy regulator can resolve a dispute over the future of the only electricity transmission cable linking the two states.

The Australian Energy Regulator is due to decide in June whether to officially reject an application by APA Group to convert the 370-kilometre Basslink undersea cable into a regulated asset, which would allow the company to recoup its operating costs as a line item on consumer energy bills.