Energy retail competition booming despite few customers switching

Competition in the energy retail market has boomed according to the regulator, despite few customers engaging and taking advantage of easing conditions.

The Australian Energy Regulator (AER) found that fewer than 20 per cent of consumers had switched providers in the past year, even though the market had continued to transform with more energy plan and provider choices, as well as lower prices on offer.

In its latest report, the AER highlighted the steady decrease of wholesale energy prices as the reason behind a spike in competition, because it allowed retailers to reduce the energy prices offered to bill-payers.

Wholesale electricity prices in Australia

Source: AER, State of Energy Market 2021 Report.

Leading the charge in reducing costs were smaller, tier two energy retailers, like Alinta Energy. According to the AER, the lowest price offered by a smaller energy provider was typically more than $100 cheaper than the lowest offer from one of the ‘big three’ retailers – AGL, Origin and EnergyAustralia – in 2020.

As the market continues to grow and diversify, customers shouldn’t always rely on the bigger power companies as many of the cheapest deals are currently being offered by brands people may not be familiar with, said Canstar Blue’s Energy Editor, Jared Mullane.

“This new data from the AER highlights why consumers should be willing to give the smaller guys a go, especially when they’re consistently offering some of the cheapest prices of late,” he said. “That being said, the energy retail market is constantly evolving with many providers – old and new – willing to entice customers through cheaper rates as well as other value-add incentives. That’s why it’s so important to compare plans from multiples providers before diving straight in, or alternatively, pick up the phone and call your power company and ask to be put on their best offer.”

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.

A changing energy market: Lower prices and new providers

Hotter competition between June 2018 and February 2021 meant that the median market offer – that is, the average energy price offered by providers – was almost 20 per cent lower than the energy price caps – known as the default offer or Victorian Default Offer– set by regulators, the AER reported. That was very nearly the largest gap between the price cap and market deals offered by providers since these regulations were first introduced in 2019.

South Australia enjoyed the biggest drop in provider pricing, down 19 per cent in this period, followed by New South Wales with a 10 to 18 per cent drop and Queensland (8-16%) and Victoria (7-10%) bringing up the rear.

The AER also reported that residential customers who switched to the best market offer in most regions during February 2021, could have saved between $180 and $300 annually.

Since 2020, 11 retailers have been authorised to sell electricity while two providers have started selling gas. This is in addition to five new companies opening up for business in the same period, namely Bright Spark Power, Electricity in a Box, Glow Power, Radian Energy and Social Energy.

So, why aren’t customers switching?

Given the increase in market competition, one would think customers are switching in droves, yet AER data confirmed that this is not the case. The energy regulator stated that nearly a third of customers have never switched energy retailers or plans before.

Tasmanians were revealed as the least likely to have switched before (71%), followed by the ACT (43%), and NSW and QLD (both 37%). It was a different story for Victorians, with nearly two thirds of consumers reporting a switch in plans or providers.

Possible reasons why people aren’t switching that were hypothesised by the AER include; lack of confidence in the market, satisfaction with their current provider or customers unaware of the fact they could switch providers.


Image credit: PopTika/Shutterstock.com, Australian Energy Regulator website.

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