ACCC urges Aussies to seek out cheaper electricity

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Consumer watchdog ACCC is urging households and small businesses to contact their energy company and ask if a cheaper electricity plan is available, in light of some recent price increases in the range of 10-20% above the regulated safety net.

The electricity price safety net was designed to protect disengaged consumers. It establishes pricing rules that limit how much companies can charge customers on these plans, which are called standing offer contracts.

Related article: ACCC: Households feel pain of wholesale price spikes

About 10% of residential customers are on standing offer contracts, compared to about 90% that are on market offers. The ACCC has seen several letters recently sent by energy companies to market offer customers advising them of price increases above the safety net.

Everyone has a right to receive a standing offer contract, but energy companies are not obliged to move customers onto it when they increase the price of an existing market offer contract higher than the safety net.

“We know that many Australians are likely paying more for electricity than they need to because their recently increased rates are higher than the safety net built into standing offer contracts,” ACCC commissioner Anna Brakey said.

“We are seeing evidence of a significant reversal in the role of the safety net price, which was designed as a maximum price to protect disengaged consumers but is becoming a cheaper option for many people.”

“You don’t necessarily need to change energy company to get a better deal: the simplest thing you can do is to contact your existing company and ask how your current plan compares to the regulated standing offer,” Brakey said.

Energy companies are obliged to display the percentage difference between any electricity plan they offer and the regulated standing offer, which is called the reference price.

Recent letters seen by the ACCC from energy companies to residential customers in New South Wales, Victoria, South East Queensland and South Australia include the following information about price increases:

  • These new rates are 21% above the DMO reference price, however, can be 4% above the DMO reference price if you pay on time.
  • This Energy Plan is 19% more than the reference price.
  • Due to the variation in our rates from 1 July 2023, your plan will be 9% greater than the reference price.

An average household on a market plan that is now 21% above the reference price could save about $400 per year simply by moving to the regulated standing offer, assuming average consumption.

That same household could save about $600 per year if they moved onto a market offer which was 10% below the reference price, assuming average consumption.

“The government safety net price for electricity is there to protect you, and you should not be paying more than it,” Brakey said.

“We know many Australians are currently struggling with high energy prices and broad cost of living increases, so it is worthwhile to set aside some time this week to call your energy company and ask if a cheaper plan is available.”

Related article: ACCC report highlights electricity retailer squeeze

To compare offers go to Energy Made Easy, the free Government comparison site for customers in New South Wales, Queensland, South Australia, Tasmania and the Australian Capital Territory, which is operated by the Australian Energy Regulator.

For Victorian customers, go to Victorian Energy Compare, the free Government comparison site operated by the Victorian Government.

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