Pensioners will have to bear on the new rule imposed by the federal government, which is to penalize those who sell its excess electricity from their solar power systems to the electric company.

Rod Campbell, a former policeman and a pensioner, spent $11,000 to install solar panels on his home in the North South Wales Town of Port Macquarie. He was thoroughly disappointed when he discovered that the government's rules would lead to pension cuts if violated.

''The government preaches that it wants you to cut your carbon footprint and as soon as you do it they punish you for it,'' the pensioner told News Ltd papers. ''We could suffer a loss of pension for trying to do a good thing."

In a statement released from the office of Families Minister Jenny Macklin, any money disbursed by the electricity company "as a direct payment or as a credit or rebate on a person's electricity bill" for pensioners should be considered as an income for the social security welfare.

A spokesperson for Ms. Macklin confirmed that the pensioner will be be penalized once it sells its power back from the company and receives cash payments or a rebate on their power bill.

Senator Steve Fielding is appalled by the situation and calls the government "stingy" for penny pinching. He argued that the government should also consider the difficulties the pensioners face when electricity prices are increasing.

''People have done the right thing and signed up to help the environment like the PM wanted them to and now they're being penalized for it. It's just disgusting,'' he said.