New rule to ban ‘dodgy’ energy discounts

The Australian Energy Market Commission (AEMC) has introduced a new rule prohibiting energy retailers from making discounts appear bigger than they actually are.

The new rule will prevent retailers from offering discounts on an energy deal if the discount is based on higher rates than the retailer’s standard rates.

AEMC chairman John Pierce said preventing discounts off inflated base rates is another important way of protecting consumers and giving them more control over their energy bills.

“Discounting can work to benefit consumers as long as the details are properly disclosed,” Mr Pierce said.

“But dodgy discounts deliberately designed to confuse consumers are not acceptable.

“Confusion around retail price offerings also means most consumers don’t grasp the opportunities on offer.

“That’s why it’s important to have rule requests like these – so competition in the retail market delivers for consumers.”

“There’s no single deal that is best for every customer, given the different ways people use energy. So it’s still important of customers to shop around.”

The rule was requested by the Federal Minister for the Environment and Energy Josh Frydenberg, and is part of the reform package from ministers following the Australian Government’s roundtable with energy retailers last year to help deliver more affordable energy for consumers.

The AEMC’s final determination also recommends new civil penalties if retailers breach the Retail Pricing Information Guidelines which set out how energy prices must be presented.

“Big discounts on an energy offer can seem very attractive, but if the discount is only available because the price of energy is artificially inflated, the consumer can end up worse off,” Minister Frydenberg said.

“The new rule will prevent retailers from attempting to confuse consumers, providing them with the confidence that a discount is exactly that – a discount.”

The new rule starts on July 1, 2018.