Thousands saving up to $430 a year on energy

Nearly a million customers on standing offers have seen automatic savings to their electricity bills.

Thousands saving on energy prices

Nearly a million customers on standing offers, or default contracts, in NSW, South Australia, south-east Queensland and Victoria have already seen automatic savings to their electricity bills.

Average savings on standing offers since the electricity pricing reforms came into effect on 1 July 2019 amount to between $130 and $430 a year for households, according to the Australian Competition and Consumer Commission’s (ACCC) August 2019 electricity market report, which was published on Monday.

But the report also shows that most consumers can achieve further savings by comparing advertised prices and shopping around, particularly with smaller electricity retailers.

About 800,000 household customers on standing offers were placed on the new, cheaper standing offers from 1 July 2019.

“Prices of many standing offers have already fallen significantly, providing immediate and automatic savings for some households,” said ACCC chair Rod Sims.

“We estimate households on standing offers will save an average of between $130 and $430 a year, which is good news for these consumers.”

The standing offer pricing reforms, which were based on recommendations in the ACCC’s Retail Electricity Pricing Inquiry report, reduce and cap the excessive prices of electricity plans for customers who are not on competitive market offers. These customers end up on standing offers, which effectively represent the maximum price.

“There are many offers available in the market that are cheaper than the standing offers,” Mr Sims said.

Under advertising reforms, which also came into effect from 1 July 2019, it is much easier for customers to compare prices, because advertised prices must be compared to a common benchmark (known as the reference price).

“The new advertising requirements also replace previous advertisements with confusing ‘discounts’ which could not really be compared with one another,” Mr Sims said.

In one example, before the reforms, a retailer in South Australia advertised a conditional discount of nine per cent, which was a deal that would have cost an average consumer $560 more than the cheapest offer without an advertised discount.

The report finds that since 1 July 2019 retailers have moved away from offering discounts that are conditional, for example, for paying on time, making offers easier for consumers to understand and compare.

Smaller retailers are offering the lowest prices
ACCC analysis of recent changes in prices shows that a number of smaller retailers had cheaper offers than the ‘big three’ retailers (AGL, EnergyAustralia and Origin).

For example, an average Sydney household could save around $100 per year by switching from the cheapest offer by one of the big three retailers to the cheapest market offer available.

“Our report shows that households can find an even better deal, potentially saving hundreds of dollars a year, by shopping around and looking at the offers of some of the smaller retailers in the market,” Mr Sims said.

As at 12 July 2019, the annual cost of the cheapest market offer for average households, depending on which distribution zone they lived in, was:

  • $290 to $380 lower than the standing offer price in New South Wales
  • $260 lower in south-east Queensland
  • $300 lower in South Australia.

In Victoria, the cheapest market offer, depending on the distribution zone, was $250-$300 a year below the maximum price.

The report also found that in most regions, the big three retailers, when looked at together, had narrowed their price range more than the price range of the market as a whole.

Calls for continued reform
The report also examined the cost components of electricity bills, highlighting the importance of progressing policies to restore electricity affordability.

In 2017-18, network costs were the largest component of a retail bill, making up 42 per cent, followed by wholesale costs (33 per cent), retail costs and margin (17 per cent) and environmental green schemes (eight per cent).

Network costs fell by 7.8 per cent, or $55 per customer, in 2017-18; these costs are highest in NSW, south-east Queensland and Tasmania, largely due to past over-investment in network assets.

“As we recommended in our Retail Electricity Pricing Inquiry report, addressing this past over-investment by writing down asset values or providing rebates on network charges for privatised assets would save average residential customers in those states at least an extra $100 a year,” Mr Sims said.

“Although environmental green scheme costs make up a relatively small part of the bill, they still have an impact on prices and the reduction in green scheme costs in south-east Queensland of around $60 per customer shows the impact of government decisions to absorb such costs rather than passing them on to customers.”

Wholesale costs increased significantly in 2017-18 by 28 per cent or $113 per customer. Several important reforms focused on improving competition in the wholesale market are in process, including for wholesale demand response, which would allow electricity users to reduce their demand and save money when prices are high.

Have you noticed any change in your energy bills since 1 July?

If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.

RELATED ARTICLES





    COMMENTS

    To make a comment, please register or login
    Tood
    17th Sep 2019
    10:48am
    blah blah blah, same old BS, keep shopping around, shouldn't be necessary!!! I long for the days when this industry was regulated and the price was the price before it was all sold off to these private gougers. If Scomo thinks this is the nirvana solution he's got rocks in his head.
    Horace Cope
    17th Sep 2019
    11:08am
    Some good news at last. Not only are there savings but, more importantly, if we try and compare prices we are comparing like with like.
    GrayComputing
    17th Sep 2019
    6:31pm
    Whenever our electricity, gas, phones and water is privatised (both here and abroad) then prices go way up and service reliability goes down the gurgler.
    The CFO (chief financial officers) do not understand maintenance and planning decades ahead.
    They only care about making the shareholders richer at our expense.
    When CT0 (chief technical officers) ran the engineering it was so much better
    Cat
    17th Sep 2019
    1:49pm
    "Our report shows that households can find an even better deal." - More RUBBISH! - again. Like millions of people there is only one energy provider in my region along with many other regions and we continue unabated to be callously fleeced.
    floss
    17th Sep 2019
    4:25pm
    Rubbish what lies mine has gone up, just more B.S . from our so called leader.Must agree with you Tood.Horace you are a fool by the way.
    Horace Cope
    17th Sep 2019
    4:36pm
    I read the article floss, did you? The quotes about savings and comparisons come from the ACCC, not a politician. I must say that I haven't been a member here for very long but it's hard going if one tries to be positive. A lot of abuse that may not be warranted such as calling one a fool because of an agreeable comment about the article.
    Polly Esther
    17th Sep 2019
    7:21pm
    hang in there Horace, not all are as rude and little knowing as our friend floss.
    And by the way to floss and Tood, it's not, I repeat not the fault of Scomo.
    GrayComputing
    17th Sep 2019
    6:29pm
    Whenever our electricity, gas, phones and water is privatised (both here and abroad) then prices go way up and service reliability goes down the gurgler.
    The CFO (chief financial officers) do not understand maintenance and planning decades ahead,
    They only care about making the shareholders richer at our expense.
    When CT0 (chief technical officers) ran the engineering it was so much better
    Teacher
    18th Sep 2019
    1:33am
    Trouble is, some of these newer providers may give you a discount for 12 months and then put the price up again like some providers of different services have done in the past. Better the devil you know!
    Teacher
    18th Sep 2019
    1:33am
    Trouble is, some of these newer providers may give you a discount for 12 months and then put the price up again like some providers of different services have done in the past. Better the devil you know!
    ggrob
    18th Sep 2019
    7:14pm
    Please note this is for NSW, Vic, Qld and SA. We, in Western Australia, don't get this because of the monopoly in place for electricity!
    Thank goodness a couple of years ago a particular local company decided to try to beat the previous monopoly on gas. Aa a result an eastern states company came in to try to take business away from the local company, but have only taken it away from the previous monopoly company.
    Misty
    19th Sep 2019
    10:56am
    Nothing new here, I have been comparing prices for years and NO MY BILL IS NOT CHEAPER.
    The Care Bear.
    22nd Sep 2019
    9:09am
    Here is a thought, try using less.
    Misty
    22nd Sep 2019
    10:28am
    A bit hard in the winter The Care Bear when we sometimes have -11 temperatures.
    Misty
    19th Sep 2019
    10:56am
    Nothing new here, I have been comparing prices for years and NO MY BILL IS NOT CHEAPER.
    Bottle-O-Rum
    22nd Sep 2019
    6:21pm
    Back in the good old days, the SECV generated and delivered close to the world's cheapest electricity. Then a combination of left-wing (moderate) politicians and "green" activists built a false message spiralling us towards disaster. Scomo may have won the "unwinnable election" but does nothing to remedy the base causes of our malaise, such as the 'Paris Agreement'. Go the Donald.
    Misty
    23rd Sep 2019
    1:17am
    I don't think so, he is as disliked in the USA as much as he is here, the Donald I mean, so I have been told by a business owner in the US, just popular with his rusted on base.


    Tags: money, finance, energy,