Are 0% energy discounts as good as they seem?

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When it comes to electricity plans, bigger is not always better. While energy retailers have been using big discounts to attract new customers for years, it seems the tide is slowly turning, with many now promoting plans with no discounts to entice consumers to switch.

Confused? It’s understandable. Especially when you consider that some 0% discount electricity plans are now working out much cheaper than plans with up to 30% off – even when both plans come from the same retailer! How can one plan with no discount be cheaper than one with 30% off when both come from the same provider? It’s easy really – it’s called marketing.

In recent times, AGL, Lumo Energy and GloBird Energy have all revealed new products promising huge discount savings of… 0%. This is in addition to their existing plans, some of which do include conditional discounts. So what gives?

Well, as the potential flaws in big discount electricity plans have come to light in recent years – thanks to consumer groups like Canstar Blue highlighting the issue – it seems that some retailers are trying to tap into the segment of energy customers who now look beyond the big discounts in search of better pricing.

Some retailers like Momentum Energy and Tango Energy (previously Pacific Hydro) have long marketed themselves as the choice for customers who want to avoid the minefield of confusing discounts. But now others have jumped on the 0% discount bandwagon, while still maintaining their big discount offers.

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0% Discount Electricity Plans

AGL Essentials

Aptly named ‘Essentials’, AGL’s 0% discount offer is currently only available in Victoria, where the retailer also recently launched a prepaid power plan.

Promising “simply low rates”, the plan comes with fixed rates for 12 months, but no exit fees should you wish to leave early. However, it is only available if you commit to monthly, email billing and direct debit payments. Rates on this product are noticeably cheaper than other AGL offers with big discounts – and Canstar Blue’s electricity comparison tool also shows that it works out cheaper overall.

Lumo Energy Basic

The ‘Basic’ plan from Lumo Energy is available in the two states the retailer serves – Victoria and South Australia.

Claiming “basic low rates for your home”, the plan comes with no lock-in contract or exit fees. However, rates are variable, meaning they could be changed at any time. In Victoria, the Lumo Basic plan comes up against a handful of other, big discount offers from the retailer, but still performs well as one of the cheapest overall. The plan is a little less competitive in South Australia, but still works out cheaper overall than one discounted offer.

GloBird Energy EasySave

GloBird Energy is known for its big conditional discounts, but its EasySave product in Victoria bucks the trend with no discount at all.

The retailer claims the product “keeps costs at a minimum and passes on the savings”. Indeed, Canstar Blue’s electricity database shows that the plan works out cheaper than the retailer’s other market offers, all of which provide discounts of more than 30% off electricity usage charges. The one unusual catch is that you must pay by credit card to be eligible for the deal.

Momentum Energy & Tango Energy

Unlike the retailers mentioned above, Momentum Energy and Tango Energy deal exclusively in 0% discount electricity plans.

In the case of Tango Energy, its Home Select plan comes with fixed rates for 12 months, while Momentum Energy’s SmilePower Flexi has variable rates.

  • Momentum Energy says “we don’t do confusing discounts, just great rates”.
  • Tango Energy says “with great rates, we don’t need to offer confusing discounts”.

You can see where they’re going with this…

Should you go with a 0% discount electricity plan?

Electricity plans with no conditional discount can work out cheaper overall than some plans with big discounts. But in typical energy fashion, things are not always as simple as they seem. In the same way that big discounts don’t always mean big savings, sometimes plans with no discounts might not be as great as they seem.

Also consider that some retailers will be using 0% discounts as their main marketing tool, in the same way that providers have been using those big discounts for several years. There’s nothing wrong with this per se, but it’s worth keeping in mind.

The one guaranteed good thing about 0% discount plans, however, is that they remove the potential trap of missing out on conditional discounts and being left with much higher bills as a result. They may not always be as great as they seem, but if you often struggle to pay bills on time – meaning you could lose a discount – they can be advantageous.

The only sure-fire way to see just how these different types of plans compare is to use a comparison website like Canstar Blue to see through all the marketing and rank plans based on which really do work out cheapest. Otherwise, you would need to be something of a mathematical genius!

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