Default energy pricing on the way to help everyday Aussies save on their energy bill
The withdrawal of the National Energy Guarantee in recent months lead to a stall in decision making regarding the future of energy pricing, but a recent request from the Australian government could see cheaper default offers push down energy prices from as early as next year.
The Australian government has submitted a formal request to the Australian Energy Regulator (AER) to introduce a ‘default market offer’ for both households and small businesses to replace current ‘standing offers’.
“The default offer will ensure customers are not being exploited by being loyal to a service provider,” Energy Minister, Angus Taylor said.
All energy retailers have a ‘standing offer’ plan which you may be on if you haven’t actively chosen a ‘market offer’ plan or if your market offer contract has ended. Standing offers can be priced higher than market offers so there’s little incentive for retailers to help customers on those plans choose a cheaper option.
A report from the Australian Energy Market Commission found that residential customers in the National Energy Market could save between $273 and $832 a year on their energy by switching from a median standing offer to the cheapest market offer.
“Market offers are can be confusing as it’s hard to know whether you’re better off with lower tariffs and no discount or higher tariffs with a discount. Improved transparency would help navigating the energy price maze easier,” said Mozo Data Manager, Peter Marshall.
“With the potential to reduce energy bills for some people by hundreds of dollars a year, it’s a strategy worth looking into.”
The government has asked the AER to develop a maximum price for the default market offer by April 2019, to apply on July 1. But before the new offer can be implemented, the government will need to legislate the changes.
ACCC inquiry accelerates default offer plans
This plan has been implemented in response to a recommendation from the ACCC following its July inquiry into retail power prices.
The recommendations made by the consumer watchdog detailed the need for a ‘default’ offer, and for more transparency in the National Energy Market.
The suggestion was widely accepted by the Turnbull government, and now by the Morrison government.
More changes to demystify energy pricing
As part of the plan to help Aussies save on their energy bills, the AER will also provide a ‘reference bill’ from which electricity retailers can calculate and advertise discounts, helping customers understand and compare their energy easier.
“With so much confusion around energy price discounts, it’s a welcome relief to see a push for transparency in the market,” said Marshall.
If you’re tired of confusing discounts and high energy bills, it may be time for you to switch to different plan. The recently released Mozo Experts Choice Energy Awards break down the cheapest energy plans by state, so you can start your search off on the right foot.
And for more great plans, visit our energy comparison tool.