Yahoo Finance Aussies wasting $400 a year on expensive electricity plans
Some Aussies have been hit with price increases 10-20 per cent higher than the regulated safety net.
Aussies are being urged to contact their energy company and ask if a cheaper electricity plan is available, following new findings from the consumer watchdog.
The Australian Competition and Consumer Commission (ACCC) said it had seen several letters sent by energy companies to customers on market-offer plans advising them of price increases above the regulated safety net.
The price safety net was designed to protect consumers who didn’t compare their energy plans. It establishes pricing rules that cap how much companies can charge customers on standing-offer plans.
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The ACCC found some companies were now increasing prices 10-20 per cent above the safety net. While everyone has the right to receive a standing-offer contract, energy companies are not obligated to move customers onto it if it works out cheaper than the increased market-offer contract.
“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.”
Companies are required to display the percentage difference between any electricity plan they offer and the regulated standing offer, known as the reference price.
Aussies urged to compare
The ACCC found the average household on a market plan that was 21 per cent above the reference price could save about $400 per year by switching to the regulated standing offer.
The same household could save about $600 a year if they moved onto a market offer that was 10 per cent below the reference price.
“The government safety net price for electricity is there to protect you, and you should not be paying more than it,” 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.”
Don’t pay a loyalty tax
Recent ACCC analysis found 90 per cent of currently advertised market offers were below the reference price.
While you don’t necessarily have to switch energy companies, Brakey noted the cheapest offers on the market appeared to be reserved for new customers rather than existing ones.
“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,” she said.
“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.”
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