Discounts on electricity and gas prices can be misleading

May 21, 2018

Electricity Price Increases – Why Are Charges On the Rise?

If you choose an electricity or gas plan based on the size of the discount you could end up paying higher prices.

Consumer advocate groups including the Australian Competition and Consumer Commision (ACCC) and Canstar Blue recently reviewed a range of electricity and gas deals and found that those offering generous discounts can also have the highest usage and supply charges.

The ACCC’s preliminary report into Retail Electricity Pricing found consumers could end up paying more overall because deals tied to large headline discounts were often based on much higher base rates.

Research group Canstar Blue told news.com.au that their analysis demonstrated that plans “with discounts of just 2 percent and 10 percent work out cheaper than some of those promising 30-35 percent off.”

Consumers need to compare the actual dollar cost of their current electricity and gas bill with a range of alternative plans to determine the real savings.

Consumers also need to read the fine print in electricity and gas plans as discounts are often conditional on paying the bill on time, receiving paper bills or paying by direct debit. Consumers can receive a shock when they are slugged with up to 70 percent higher energy prices after losing their discount if they pay their bill a few days late.

Discounts are also often reduced or removed by electricity and gas retailers over time and are often only available in an initial “benefit period” that often lasts only 12 months.

Many electricity and gas retailers offer plans with high discounts in the knowledge that consumers will be too busy to switch and will find it confusing to compare their bill with alternative plans. Many consumers will remain in the same plan even after their prices have risen significantly and the initial discounts have been significantly reduced or removed.

Services such as EZswitch can make it easier for consumers to compare the real cost of alternative energy plans and understand the conditions associated with discounts.