Report shows energy discounts don’t guarantee lower bills

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

Energy companies continue to offer big discounts that don’t necessarily translate to lower bills, according to the latest report on the Victorian energy market.

The quarterly market update from the Essential Services Commission shows despite the practice being called into question, retailers are offering even larger discounts even though this doesn’t guarantee lower prices for consumers.

In July 2017, the average discount for electricity usage was 29 per cent. By June 2018, the average discount has increased to 33 per cent.

Essential Services Commission chair Ron Ben-David said little appears to have been done to reduce the confusion of offers faced by customers.

“It’s been more than a year since we first showed how confusing and indeed meaningless these discounts can be,” he said.

“When a 40 per cent discount from one retailer can result in an annual bill that is about the same as a bill with no discount from another retailer, it’s clear the market has a problem.”

Dr Ben-David said while the report shows a rise in customer disconnections in the year to date, there are signs energy retailers are stepping in earlier to help customers who are having trouble paying their bills.

“More customers with large debts are being put on more realistic payment plans,” he said.

“This is an encouraging sign ahead of our new payment difficulties framework coming into effect at the start of next year.”

The report revealed:

  • disconnections increased by 11 per cent over the previous quarter and were 22 per cent higher than at the same time last year
  • there has been a significant drop in the number of customers having their gas bills estimated with a 25 per cent reduction when compared to the same time last year.
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