ACCC Warns Staying Loyal to Energy Providers Costing Over $300 More

A stock image of a residential electricity bill in Brisbane, Australia on May 15, 2024. AAP Image/Jono Searle

Australian consumers have been told to actively look for better energy deals this holiday season, as staying loyal to their current providers is costing them more money.

According to a new report (pdf) by the Australian Competition and Consumer Commission (ACCC), National Electricity Market (NEM) consumers who have been with an energy supplier for two years or more are currently subject to a “loyalty penalty.”

While retail energy prices dropped between Aug. 1, 2023, and Aug. 1, 2024, the ACCC found that, on average, households could be paying $238 (US$148) more per year compared to those on newer offers.

It is worth noting that the longer a customer remains on an offer, the more they pay.

Specifically, the report said the loyalty penalty could reach as high as $317 for customers on flat-rate offers that are two or more years old.

Similar situations also applied to customers on older time-of-use and demand offers, it added.

ACCC Commissioner Anna Brakey said consumers who hadn’t changed their energy plans for the past 12 months should consider switching to a new provider now.

“If you haven’t changed electricity plans in the past 12 months, chances are you are paying more for your electricity than you need to,” she said.

“We are urging Australians to take some time this holiday period to have a look at the Energy Made Easy or Victoria Energy Compare websites to see if there is a better plan.

“Alternatively, people could simply call their retailers to see if they have a better offer available.”

The commissioner also advised consumers to read their bills carefully as that could show consumers they were paying too much.

“Every three to four months, electricity companies are required to tell you on your bill if a cheaper plan is available,” she said.

“If you get this message, you are paying more than you need to.”

Complex Pricing Issue

The report stated that a portion of consumers found it challenging to manage energy bills due to the complex pricing of their plans.

This occurs as more customers sign up for time-of-use or demand tariffs.

In addition, there has been an increase in the number of customers on offers with multiple pricing elements.

While customers on time-of-use offers had lower average annual energy prices than flat-rate offers, 51 percent of those on demand offers had annual prices at, or higher, than the government safety net price.

“The increasing complexity in pricing as the smart meter rollout continues, presents a real challenge to consumers who are trying to reduce their electricity bills,” Brakey said.

“While we are pleased that compared annual prices have decreased from 2023 to 2024, and more consumers are on offers below the government safety net price, a substantial proportion of households remain on prices above these levels.”

According to the ACCC, in the 12 months to Aug. 1, 2024, NEM customers on flat-rate offers experienced a 4 percent drop in energy bills, while those on time-of-use offers saw a 5.5 percent decrease.

Meanwhile, customers on demand offers only reported slight falls in energy prices.