Discover how Aussies are being taken advantage of on their electricity bills!
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In the midst of a cost-of-living crisis, millions of Australians are unknowingly paying more for their electricity than necessary.
The Australian Competition and Consumer Commission (ACCC) has recently exposed this alarming trend, urging consumers to actively seek out cheaper deals as the current protection system has 'failed dismally'.
The ACCC conducted an assessment of the energy deals of five million Australians, comparing them to the cheapest available options on the market.
The results were shocking: a staggering 79 per cent of consumers were found to be on higher offers than what’s available, with the ACCC warning that loyalty to a single provider could be costing Australians dearly.
Money Expert Joel Gibson explained: 'The big secret for years in the energy market has been what people are really paying—we can look at current offers and see what they cost, but most people are paying old prices, and only energy retailers know what those prices are. This report finally pulls back the veil, and what’s behind it is very ugly.'
The ACCC's findings have been described as a 'disgrace', highlighting that Australians are not being protected by default offering, which is meant to be the base level the government regulator sets in July yearly and considers a 'fair price' for electric consumption.
'In 2019, the Morrison government rejigged the energy market to protect households from being ripped off, but now we have half of Australia paying more than the price cap they created,' Gibson said.
'It was meant to be an effective soft price that you pay if you don't shop around for market offers.'
‘This suggests a serious problem in our energy market, with around half of us paying hundreds of dollars, even $1,000 or more above what we should for electricity in the coming year,’ he added.
According to Canstar's Consumer Pulse report released this week, almost 70 per cent of Australians think the government is not doing enough to reduce energy costs, and electricity has remained the main concern for households.
'Electricity costs have reached more than $400 per quarter for the first time since 2019, with Aussies reporting they are paying $34 more on average than respondents were last year,' Canstar explained.
Interestingly, only 16 per cent had switched providers in the last year.
This could be due to a lack of awareness or understanding of the potential savings that could be made by switching providers.
So, how can you save on electricity? One of the most effective ways to take control of your energy bills is to compare energy plans from one year to another. You can do this through this government website.
Comparing will help you avoid paying the loyalty tax that comes from benefit periods running their course after a year before moving on to the provider’s standing offer plan.
ACCC Commissioner Anna Brakey said: 'Electricity retailers offer cheaper plans to attract new customers, but over time, we observe these plans becoming relatively more expensive, so many loyal customers will be paying more than they need to be.'
‘Prices for new customers tend to be competitive, but we are concerned that the market is not delivering for customers who do not regularly switch or engage with their existing retailer.’
From September 30, electricity companies are required to notify customers of their bills for an affordable plan available, including the savings they could gain by switching.
This is called the retailer’s ‘better offer’ statement and will be displayed on the first page of subscribers' regular power bills.
The Australian Energy Regulator’s (AER) Better Bills Guideline also requires retailers to include details on how to switch plans. This is a significant step towards transparency and empowering consumers to make informed decisions about their energy consumption.
However, the onus is still on consumers to actively seek out the best deals. Gibson explained, 'It's called the front book/back book pricing methodology…You see it in energy, insurance, banking, and it means old loyal customers pay more to subsidise the cheap deals to attract new customers.'
‘So it's always been a bit of a mystery whether you're getting the best deal—they have “retention offers” that they only offer you when you're leaving.’
‘They also have under-the-table deals they offer to friends and family, or to motoring clubs or rewards programs or money-saving clubs.’
You can watch Gibson’s video below:
In conclusion, it's crucial for consumers to stay informed and proactive in managing their energy costs.
Regularly comparing energy plans and switching providers when necessary can lead to significant savings. Don't let loyalty to a single provider cost you hundreds, or even thousands, of dollars each year.
What are your thoughts on this issue? Have you experienced a similar situation? Share your experiences and tips in the comments below.
The Australian Competition and Consumer Commission (ACCC) has recently exposed this alarming trend, urging consumers to actively seek out cheaper deals as the current protection system has 'failed dismally'.
The ACCC conducted an assessment of the energy deals of five million Australians, comparing them to the cheapest available options on the market.
The results were shocking: a staggering 79 per cent of consumers were found to be on higher offers than what’s available, with the ACCC warning that loyalty to a single provider could be costing Australians dearly.
ACCC exposed how Aussies are getting ripped off in their power consumption bills! Image: Freepik
Money Expert Joel Gibson explained: 'The big secret for years in the energy market has been what people are really paying—we can look at current offers and see what they cost, but most people are paying old prices, and only energy retailers know what those prices are. This report finally pulls back the veil, and what’s behind it is very ugly.'
The ACCC's findings have been described as a 'disgrace', highlighting that Australians are not being protected by default offering, which is meant to be the base level the government regulator sets in July yearly and considers a 'fair price' for electric consumption.
'In 2019, the Morrison government rejigged the energy market to protect households from being ripped off, but now we have half of Australia paying more than the price cap they created,' Gibson said.
'It was meant to be an effective soft price that you pay if you don't shop around for market offers.'
‘This suggests a serious problem in our energy market, with around half of us paying hundreds of dollars, even $1,000 or more above what we should for electricity in the coming year,’ he added.
According to Canstar's Consumer Pulse report released this week, almost 70 per cent of Australians think the government is not doing enough to reduce energy costs, and electricity has remained the main concern for households.
'Electricity costs have reached more than $400 per quarter for the first time since 2019, with Aussies reporting they are paying $34 more on average than respondents were last year,' Canstar explained.
Interestingly, only 16 per cent had switched providers in the last year.
This could be due to a lack of awareness or understanding of the potential savings that could be made by switching providers.
So, how can you save on electricity? One of the most effective ways to take control of your energy bills is to compare energy plans from one year to another. You can do this through this government website.
Comparing will help you avoid paying the loyalty tax that comes from benefit periods running their course after a year before moving on to the provider’s standing offer plan.
ACCC Commissioner Anna Brakey said: 'Electricity retailers offer cheaper plans to attract new customers, but over time, we observe these plans becoming relatively more expensive, so many loyal customers will be paying more than they need to be.'
‘Prices for new customers tend to be competitive, but we are concerned that the market is not delivering for customers who do not regularly switch or engage with their existing retailer.’
From September 30, electricity companies are required to notify customers of their bills for an affordable plan available, including the savings they could gain by switching.
This is called the retailer’s ‘better offer’ statement and will be displayed on the first page of subscribers' regular power bills.
The Australian Energy Regulator’s (AER) Better Bills Guideline also requires retailers to include details on how to switch plans. This is a significant step towards transparency and empowering consumers to make informed decisions about their energy consumption.
However, the onus is still on consumers to actively seek out the best deals. Gibson explained, 'It's called the front book/back book pricing methodology…You see it in energy, insurance, banking, and it means old loyal customers pay more to subsidise the cheap deals to attract new customers.'
‘So it's always been a bit of a mystery whether you're getting the best deal—they have “retention offers” that they only offer you when you're leaving.’
‘They also have under-the-table deals they offer to friends and family, or to motoring clubs or rewards programs or money-saving clubs.’
You can watch Gibson’s video below:
In conclusion, it's crucial for consumers to stay informed and proactive in managing their energy costs.
Regularly comparing energy plans and switching providers when necessary can lead to significant savings. Don't let loyalty to a single provider cost you hundreds, or even thousands, of dollars each year.
What are your thoughts on this issue? Have you experienced a similar situation? Share your experiences and tips in the comments below.
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