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Buyer beware: big energy discounts could come with a shock

HerCanberra Team

If you want to save money on your energy bills, don’t chase the biggest discount.

That’s the advice from consumer groups who have examined a range of electricity and gas deals and found that those offering generous discounts can also have the highest usage and supply charges.

The ACCC’s preliminary report into Retail Electricity Pricing found that if consumers switched providers based on the biggest discount, they could end up paying more overall because deals tied to large headline discounts were often based on much higher base rates.

Research group Canstar Blue backed up the ACCC findings, telling news.com.au that their analysis demonstrated that plans “with discounts of just 2 per cent and 10 per cent work out cheaper than some of those promising 30-35 per cent off.”

It’s a decision that Canberrans are increasingly being asked to make. Faced with rising energy costs, Nicholls residents James and Cindy Meadley had been looking for ways to manage their usage. When they received a sales call from an energy retailer touting an offer with a large discount, they were naturally interested in finding out more.

“It seemed like a good deal to me” said Cindy. “But I’m glad I read the terms because the discount was applied on a higher base rate and you only received it if you went on direct debit—plus you were locked in for two years!”.

The Meadleys’ experience is a timely warning to anyone considering a discount offer on energy for their home or business. They say it’s important for consumers to carefully check the fine print and compare the base usage rates and fixed costs to be sure of exactly what they’re committing themselves to.

In the ACT, consumers can choose between a handful of energy retailers who are all offering various contract terms. Basic usage and supply charges also vary, with a recent analysis showing a wide gap across three retailers surveyed.

In a comparison based on a typical household’s annual electricity bill, local retailer ActewAGL came out in front with their residential standing offer some $226 cheaper than other retailers.*

Consumers wanting to compare current market offers and better understand what’s being offered are urged to visit the Australian Government’s Energy Made Easy website. It’s an independent tool that James and Cindy say ended up saving them from being locked into an energy contract that could have seen them worse off.

“It doesn’t take long to do a quick comparison and it could save you from getting a shock down the track.”

You can access the Energy Made Easy website at energymadeeasy.gov.au

*Comparison between ActewAGL and other energy retailers. Based on residential customer on a standing offer.

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