A Tasmanian welfare group wants Hydro Tasmania's record profit to be used to cut power prices.

The state government-owned power generator recorded a $238 million operating profit last financial year, double its previous result.

It means the State Government will reap a $116 million dividend from the company.

Premier Lara Giddings says it will be spent smartly.

"To help us to provide health services, to put into education, disability care and so on," she said.

But the Tasmanian Council of Social Service' boss, Tony Riedy, says many Tasmanians can not afford the electricity they need for everyday living.

He says taxpayers have paid for Hydro's infrastructure and the power generator should do more to lower power prices.

"They're the ones who should reap the benefits," he said.

"The electricity companies are enjoying great success, but large parts of those profits should be directed to keeping prices at a level that's affordable by Tasmanians.

"Electricity is an essential service and we can't have Tasmanian households having their electricity disconnected simply because their everyday usage is beyond their capacity."