The 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 to 20 per cent 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.
About 10 per cent of residential customers are on standing offer contracts, compared to about 90 per cent 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,” Ms 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 per cent 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 per cent 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,” Ms 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.”
Your loyalty could be disadvantaging you
Recent ACCC analysis shows that 90 per cent of currently advertised market offers are below the reference price. There is also significant price variation between those market offers below the reference price, with some smaller retailers offering relatively large discounts.
“The case for switching to a different energy company is strong because the cheapest offers in the market appear to be reserved for new customers, rather than existing ones,” Ms Brakey said.
“We strongly encourage households and small businesses to use the Government comparison sites Energy Made Easy and Victorian Energy Compare to find a better offer.”
“Moving to a cheaper plan through your existing energy company is the easiest way to save money right now, but there can be greater savings available for those who are willing to switch,” Ms Brakey said.
The ACCC’s website has been updated with information to help people find the best electricity deal, available at electricity prices and plans
The best questions to ask your energy company are available at contact your energy company
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.