Pay on time discounts in Victoria could soon become a thing of the past, following news of the regulator further capping the price retailers can charge customers for missing their bill payments.
In a bid to protect vulnerable Victorians, the Essential Services Commission (ESC) has decreased the amount capped for pay on time discounts from 3.62 per cent to 3.1 per cent, to help alleviate debt and begin the transition to a less discount heavy system.
ESC Executive Director of Energy Sarah Sheppard said the price cap hopes to put an end to Victorian customers being stung by a high price penalty if they miss a payment.
“Limiting the amount paid for missing a deadline helps reduce bill shock for households and small businesses. Before the cap, consumers who were late paying a bill were paying high penalties, sometimes amounting to hundreds of dollars,” she said.
“But the cap, along with a number of other energy contract reforms, hopes to put an end to high penalties as well as simplifying the range of offers.”
The new price cap sees a half a per cent decrease from the previous pay on time discount cap and was manageable thanks to a fall in debt risk – the number of losses which is maintainable before falling into debt – for Victorian energy retailers.
The new price cap will commence on or after 1 July 2021 in Victoria, on new plans only. Pre-existing pay on time discounts in Victoria won’t be affected by the price cap.
Canstar Blue Energy Editor Jared Mullane said reducing the price cap on this type of conditional discount is a big win for consumers.
“It’s great to see this kind of financial support coming to Victorian energy customers, especially for those who may forget to pay their bills on time,” he said. “While it’s a step in the right direction, plans with pay on time discounts may not be best suited to Victorians who are the set and forget type of customer, or if they regularly miss their bills.”
Though the price cap reduction is in place to help Victorians save should they miss a bill payment, some customers may need further financial assistance.
Mr Mullane added: “If you are finding it difficult to pay your electricity bills on time, it may be worth looking into alternate financial support avenues offered by retailers. Ask your retailer about what concessions, grants or payment plans may be applicable to you or go online and read a copy of your retailer’s financial hardship policy. Alternatively, if you’re struggling to keep on top of the bills, it could be time to start shopping around to see if there’s a cheaper plan that’s better suited to your needs.”
Compare Electricity Plans in Victoria
Here are some sponsored 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 and to see other products in our database that may be available. 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.
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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†. 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 and to see other products in our database that may be available. 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.
Why is Victoria making these changes?
The ESC in Victoria have been working towards a more financially fair and secure energy market for residential customers for the last few years. Starting with the setting of the Victorian Default Offer back in 2019, the ESC has continued to reform the current energy landscape with things like only allowing retailers to change prices once a year, ensuring that discounts and rebates are held for the entire duration of the contract and the price cap for pay on time discounts.
Other states have also introduced these changes under the Australian Energy Regulator (AER), with things like the Reference Price, however Victoria operates separately.
After issues with ‘loyalty tax’ and lost savings to those who didn’t wish to partake in the energy market, the AER and ESC created these default offer prices as a way to make the market easier for everyday Australians to understand.
What is a pay on time discount?
Pay on time discounts are used by some electricity providers as an added incentive for customers who pay their bill on time. Essentially it means a small percentage will be taken off your bill in reward for paying on or before the due date. If customers pay their bill later however, they usually then need to pay this same percentage back, making their bill substantially more expensive.
In some states, such as Victoria, these discounts are capped to avoid these large penalty rates for late payments. Pay on time discount price caps came into place in Victoria in 2020 to restrict the amount a retailer can charge customers for missing their bill payment.
I’m already on a pay on time discount, will I be affected?
Customers in Victoria who are already on a pay on time discount will not be affected by this price cap. Only customers signing up to new plans will experience this pay on time price cap in Victoria. If you’re unhappy with your current pay on time discount or simply wish to forgo it entirely, then start comparing plans today.
Which providers offer pay on time discounts in VIC?
Though the number of retailers who offer these discounts have decreased since the introduction of capped prices in 2020, the following companies still offer pay on time discounts in Victoria:
Are there other financial incentives for Victorians?
Some companies in Victoria offer additional incentives with electricity plans outside of pay on time discounts like paying with direct debit, receiving bills via email, bundling your plans or sign-up credits. At the time of publication, here are the following deals on offer in Victoria:
- Diamond Energy: 3% discount when you pay via direct debit and 4% discount for having your bill emailed
- EnergyAustralia: $50 sign-up credit
- GloBird Energy: 1% discount when you pay via direct debit
- Kogan Energy: $50 off your bill when you bundle your internet and electricity plans
- Momentum Energy: $50 sign-up credit for new customers
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