Energy regulator: Healthy signs for competition in market

The energy regulator has announced there’s a ‘healthy sign for competition’, as more Aussies make the switch to smaller power companies despite the bigger players holding majority of the market share.

In its latest report, the Australian Energy Regulator (AER) revealed that 80.1 per cent of residential customers were still connected to Tier 1 retailers, such as AGL, Origin and EnergyAustralia, as of December 2021.

However, it was noted that Tier 2 retailers, like Alinta and Simply Energy were gaining ground. A Tier 2 retailer refers to a company that holds less than 10 per cent of the market share within a distribution region.

A similar theme was outlined by the AER in the natural gas market, with Tier 2 retailers increasing their market share by one per cent, reaching 13 per cent in total.

As more Australians become privy to the cheaper energy deals usually on offer by the smaller providers, it helps drive market competition, which is a win for consumers, Canstar Blue’s Energy Editor, Jared Mullane, explained.

“The regulator’s latest report highlights the importance of shopping around if you’re not getting a good deal, and often it’s the case of the lesser-known brands offering the cheapest energy prices,” Mr Mullane said. “When there’s price competition between retailers big and small, consumers should take notice and take advantage, provided there’s value in it for them to switch.”

Some of the smaller brands chipping away at the national electricity market include Powershop, Powerdirect and Dodo.

As for natural gas, popular opponents to the big providers were uncovered as Dodo, GloBird Energy and Sumo.

Please note, the findings above only applies to New South Wales, South East Queensland, South Australia, The Australian Capital Territory and Tasmania. Information for Victoria is released by the Essential Services Commission (ESC) – Victoria’s independent energy regulator.

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Almost four out of five Aussies continue to save on cheaper energy deals

In addition to competition heating up, the AER also revealed that more Aussies continue to choose competitive market contracts as opposed to staying on standing offers – plans that are generally more expensive.

At least 78 per cent of bill-payers were on a cheaper electricity plan at the end of December last year, while a whopping 88 per cent of gas customers were signed up to a market contract – a deal that’s usually price competitive or offers other value-add incentives.

Mr Mullane said Australians should keep an eye out for movements in the market, as retailers change their prices all the time.

“It’s a positive sign to see many customers taking a leap of faith with a new provider, but it’s worth pointing out that electricity and gas all comes from the same poles, wires and pipes. Therefore, it’s up to consumers to seek out the best energy deals, some of which may come from a name you’ve never heard of before.”

Fewer customers complaining

Customer complaints to energy retailers have also taken a plummet over the past 12 months, according to the AER, with the total number of complaints falling by 16.5 per cent. Billing issues still remain a common bugbear for consumers, with complaints of this nature accounting for 60 per cent of all enquiries.

Source: Australian Energy Regulator (AER), Quarterly retail performance report, Q2 2021-22.

Image credit: Studio Romantic/Shutterstock.com, Australian Energy Regulator (AER) website.