If you’ve received a letter from your electricity provider informing you of a serious increase to your rates, the Australian Competition and Consumer Commission (ACCC) says you may be overlooking substantial savings.
It says some price increases – in the range of 10 to 20 per cent – are above the regulated safety net known as the default market offer (DMO). As a consequence, households should contact their energy company and ask if a cheaper electricity plan is available.
The DMO was designed to protect consumers who don’t have the time, or inclination, to shop around for the best offer. It establishes price rules that limit how much companies can charge customers on these plans, which are called standing offer contracts.
However, only about 10 per cent of residential customers are on standing offer contracts, compared to the remaining 90 per cent who are on retail market offers set by the retailers.
Everyone has the right to receive a standing offer contract, but energy companies are not obliged to promote it or move customers onto it when they increase the price of an existing market offer contract higher than the safety net.
In short, energy retailers are required to offer a cheap basic contract to everyone, but they’re not required to tell you about it.
ACCC commissioner Anna Brakey says that has resulted in many Australians paying more for their electricity than they need to, defeating the entire purpose of the DMO.
“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,” she 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.”
Quite often, retailers are punishing you for your loyalty, says Paul Coughran, general manager of utilities at Compare Club.
“Loyalty is a core value for most Australians,” he says.
“Loyalty to family, friends … your footy club. Unfortunately when it comes to the retail electricity market, loyalty is not being rewarded.”
With the cost of everything constantly rising, Mr Coughran says energy bills are a particular sore point for households, so it pays to look at what’s out there.
“Our recent Bill Stress survey indicated that close to 55 per cent of older Australians are experiencing stress with their power bills,” he says.
“Yet less than one in five has switched. So the best advice I can give is shop around – regularly. Make sure you’re getting a fair deal.”
Last days to claim $250 energy compare bonus
Victorian residents have until 31 August to claim the $250 Power Saving Bonus from the state government simply by comparing their energy bills with other providers via the government comparison website.
Victorians who receive a government payment or hold a valid concession card can claim an additional $250 on top of the Power Saving Bonus through the federal government’s Energy Bill Relief Fund.
Relief through this avenue is open to eligible concession card holders and people receiving a government payment anywhere in Australia.
What constitutes an eligible concession card differs from state to state, as does the level of assistance on offer.
If you live in NSW, South Australia or Tasmania, you can get a generous $500 back per eligible household through the program.
Queensland residents (regardless of welfare status) will receive $550 through the state’s new Cost of Living Rebate, while those currently receiving the Queensland Electricity Rebate will get $700.
In Western Australia, households registered with the Electricity Concession Extension Scheme (ECES) will get a $500 electricity credit split over two payments, while all other other residents will get a $400 electricity credit.
Northern Territory residents can get $350 per household, while in the ACT you’re eligible to receive $175 back.
Although the ACT rebate is considerably smaller than other jurisdictions, the territory’s large-scale Feed-in Tariff Scheme means annual bills in the ACT are, on average, $152 cheaper.
Have your electricity rates gone up recently? When was the last time you checked? Let us know in the comments section below.
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Disclaimer: YourLifeChoices is owned by Compare Club.
In Tasmania, do we have to apply for this power saving bonus , if so from whom. My power company 1st Energy don ‘t know much about it. !! I thoughjt it weas applied automatically from Centrelink , or the power company.
Frank, I don’t live in Tasmania but everything I can see online from Tassy about the subject says you need to register with your electricity supplier. If they still play dumb on the matter I would contact your State services and tell them the problem. Its up to them to inform suppliers. It seems to me that most State’s have left the matter deliberately vague.. Good luck.