Why energy customers are flicking the big 3 for smaller providers

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More Australians are flicking the switch on the big energy companies and signing up with smaller – often cheaper – alternatives, a new report from the industry regulator shows.

Known as ‘Tier 2 retailers’, these emerging brands continue to increase their market share, making gains against the traditional ‘big three’ – AGL, Origin and EnergyAustralia.

According to the Australian Energy Regulator (AER), Tier 2 retailers now account for 18% of the residential energy market, up from 16% at the same time last year.

Tier 2 retailers also experienced growth when it comes to residential gas supply, notching a 2% rise in market share over the same period, to now account for 10% of customers.

Canstar Blue Editor-in-Chief, Simon Downes, believes the uplift in customers switching to smaller energy retailers can be attributed to competitive pricing across the eastern states.

“The latest report from the AER reaffirms that customers are not afraid to look past the established retailers if the little guys are offering better value overall,” Mr Downes said.

“Many consumers are now wise to the fact that they get the same energy through the same poles and wires, and they’re sick of paying more than they have to. While the big three retailers can and do offer competitive prices at times, people are less concerned about switching to a brand they’ve never heard of before.

“If they have a positive experience with the service they receive – and are happy with the prices they pay – these people will tell their friends and family, and suddenly the small retailer has several new customers.”

Despite the increase in market share for the Tier 2 retailers, Origin continues to be Australia’s biggest energy retailer with close to 30% of the residential market, ahead of AGL with just over 20% and EnergyAustralia on 17%.

In small business electricity, Tier 2 retailers increased their market share from 16% to 17% over the year, with gas connections for smaller retailers jumping from 4% to 6%.

The AER report also highlights that more than three quarters of residential electricity customers are now on market contracts, which are plans that include features like discounts, bill credits, competitive rates and any other sign-up incentives, as opposed to basic standing offers which generally bring the highest prices.

How do the smaller energy providers compare?

To get a sense of how the smaller retailers compare on price in your area, we’ve matched the three cheapest plans in New South Wales, Victoria, Queensland and South Australia with the cheapest published deals on our database for AGL, EnergyAustralia and Origin.

Smaller Energy Providers Compared in NSW

Here are some of the cheapest published deals from the retailers on our database. This table includes 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.

Smaller Energy Providers Compared in VIC

Here are some of the cheapest published deals from the retailers on our database. This table includes 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.

Smaller Energy Providers Compared in QLD

Here are some of the cheapest published deals from the retailers on our database. This table includes 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.

Smaller Energy Providers Compared in SA

Here are some of the cheapest published deals from the retailers on our database. This table includes 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.

Image credit: eggeegg/Shutterstock.com

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