Vulnerable customers stung by higher energy costs for missing discount conditions

Almost one in five vulnerable customers missed out on discounts on their energy bills in the past financial year, the energy regulator has revealed.

In its State of the Energy Market 2021 report, the Australian Energy Regulator (AER) said 18 per cent of energy providers’ ‘hardship customers’ and 17 per cent of customers on payment plans didn’t meet the conditions attached to their providers’ conditional discount offers. Customers in financial difficulty were more likely than the norm to miss out on these discounts, the regulator added.

The AER defines hardship customers as those who find it hard to pay their energy bills due to experiences such as unemployment, an income cut, family violence or illness. Energy providers can offer hardship customers a payment plan to help them manage their energy costs. 

Even among customers not on a payment plan, 11 per cent failed to meet the condition of the discounts offered by their energy providers, the AER said, which meant they were forgoing the potential savings available on these types of plans

Conditional discounts are ways in which energy providers reward bill-payers, usually by offering a small percentage off their bill for meeting certain criteria such as paying on time or by making a direct debit payment. While conditional discounts can help reduce energy bills, if the requirements are not met, consumers are often left with higher overall costs.

On the positive side, the AER said that the majority of hardship customers were on a cheaper market offer energy plan, as opposed to one with a default or capped price set by the regulator, with just two per cent remaining on those less-competitive standing offers. This is likely due to the regulator’s requirement of retailers to move customers to a cheaper offer, if one is was available, to help manage their energy costs.

The AER has since at least 2016 set out how it expects energy retailers to help customers struggling to pay their bills. Its 2016 Hardship Policy mandated that hardship customers must be assisted in accessing a cheaper deal if one was available – guidance the regulator reiterated in 2020 during COVID-19.

Canstar Blue’s Energy Editor Jared Mullane said that energy discounts had long been a way for providers to stand out from the competition, with some claiming to slash bills for customers who meet certain conditions of a plan, such as paying on time. But he cautioned that it was important to understand the detail of the discount on offer.

“When it comes to conditional discounts, customers should always read the fine print to identify what’s expected of them to receive a percentage off their bills,” he said. “Also, don’t forget to check if a discount applies to the whole bill, as opposed to just the usage charges, and check out what fees are charged for failing to meet the condition(s). 

“Discounts were once a major marketing tool for energy retailers; however, many have now turned to non-discounted plans with lower rates as a way of attracting new customers.” 

The AER sets out the assistance energy providers must provide to people struggling to pay their energy bills, which can be found on its website.

Compare Energy Prices

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Ausgrid network in Sydney but prices may vary depending on your circumstances. This comparison assumes general energy usage of 3900kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Citipower network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Energex network in Brisbane but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4600kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the SA Power network in Adelaide but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

New reforms lead to fewer conditional discounts in market  

Reforms and price caps introduced in 2019 and 2020 have caused the number of electricity offers with guaranteed prices to rise significantly in the market, the AER’s report said.

The reforms, which require retailers to create reasonable price gaps between the discounted and original price and to not advertise conditional discounts as the final price to make deals look cheaper, have encouraged a spur in guaranteed pricing to prevent customer confusion. 

As of February 2021, almost 90 per cent of electricity offers in Queensland, New South Wales and South Australia had a guaranteed price with no conditional discount, with Victoria on a lower but still large 83 per cent. Providers in the Australia Capital Territory currently only offer guaranteed prices.

For the small portion of conditional discount offers that were available at the time of writing, there was a significant decrease in the size of these discounts – thanks to the 2020 price caps – compared to the discounts offered in the past, with energy providers typically offering less than 10 per cent off the original bill. 

In addition to the rise of guaranteed prices on plans, the AER noted that more retailers had also introduced other incentives to their energy plans such as subscription plans to streaming services, rewards points or carbon offsets and renewable energy resources for no extra cost. 

Which providers still offer conditional discounts?

The following retailers still offer conditional discounts at the time of publication:

  • 1st Energy
  • Diamond Energy
  • GloBird Energy 


Image credit: photastic/Shutterstock.com

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