Government asks AEMC to ban discounting on electricity offers

Australian currency in front of electricity meter (SMEs grants)
Image: Shutterstock

The federal government has asked the Australian Energy Market Commission (AEMC) to ban discounting on electricity offers that are more expensive than a retailer’s standard rate.

“The purpose of this change to the National Energy Retail Rules is to prevent retailers operating in a way that can be confusing for consumers,” Energy Minister Josh Frydenberg said in a statement.

“Currently, the offer of a big discount on an electricity contract can seem very attractive, but if the price of electricity under that offer is higher than the retailer’s standard rate, the consumer could end up worse off.

“Changing the rule will provide consumers with the confidence that a discount is exactly that – a discount,” Mr Frydenberg said.

“At the same time, the Turnbull Government will provide more information on Energy Made Easy, the Australian Energy Regulator’s (AER) online price comparison tool.”

The government says consumers can save as much as $1,000 by switching retailers, “however, they are often choosing between hundreds of deals, which can be hard to compare as they can have varying discounts and off-peak rates”.

The new Energy Made Easy will focus on making it easier to use and understand. It will also introduce new tools for more personalised advice (for example through uploading existing energy bills) and to accommodate comparisons with the growing range of more innovative offers.

These two developments support other activities to improve energy affordability, as part of the Prime Minister’s energy retailers’ roundtable, including:

  • a rule change requiring retailers to notify electricity and gas customers when their energy discounts are about to finish or change;
  • an industry commitment to inform customers on standard offers that alternative offers are available;
  • an agreement for retailers to produce user-friendly fact sheets to help consumers better understand the terms and conditions of their energy deal; and
  • a commitment from the energy companies to work with the Government and the AER to develop a comparator rate for energy deals to enable consumers to compare different offers on an even playing field.

As a result, there are now approximately 100,000 fewer customers on market offers with expired fixed benefit periods.

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