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The ACCC collected the prices of flat rate market offers for more than five million residential customers in New South Wales, Victoria, South East Queensland, and South Australia, and compared them to prices available to new customers and the prices of government-set default offers. Flat rate, rather than time-of-use or demand, is the tariff type that most households are on.
“Electricity retailers offer cheaper plans to attract new customers but over time we observe these plans becoming relatively more expensive, so many loyal customers will be paying more than they need to be,” ACCC commissioner Anna Brakey said.
“Prices for new customers tend to be competitive, but we are concerned that the market is not delivering for customers who do not regularly switch or engage with their existing retailer.”
In August 2023, 79% of residential customers were paying estimated prices equal to or higher than the median offer available on Energy Made Easy or Victorian Energy Compare. This indicates that many households could save money by changing their electricity plan.
The report also shows that the estimated cost for residential customers on market offers (flat rate) increased by significantly more than the default offers. This resulted in 47% of residential customers with an estimated annual cost equal to or higher than the default offer in August 2023. For concession customers the figure was 42%.
“Almost half of all households on flat rate market offers were paying equal to or more than the default offer, which was intended to be a reference price and safety net to protect disengaged consumers from unreasonably high prices,” Brakey said.
“For most customers there are plans currently in the market that are cheaper than the default offer.”
“We strongly encourage consumers to use the government energy price comparison sites to find a cheaper deal, but we’re also recommending that policy makers identify and address the barriers that are preventing many people from changing electricity plans and accessing cheaper market offers,” Brakey said.
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Figure 1: More residential flat rate market offer customers are paying prices equal to the default offers even when they achieve their conditional discount