The truth about energy discounts in Australia

It’s easy to be enticed by discounts when shopping around, but which of these are marketing and which are useful?

How to compare energy discounts on our engine Watch here

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To help you navigate the world of energy discounts in pursuit of the best deal, we've put together a short guide with everything you need to know.

Rates first, discounts second

Discounts are appealing because it's nice to feel like you're saving, but never purchase a plan based on discounts alone. What matters most are the rates you get charged for electricity. Here's why.

Most discounts expire after just one year

The majority of discounts are temporary, with many expiring after 12 months. Your low prices may evaporate a year later, leaving you paying more than you would on a different plan with no discount.

Conditional discounts can catch you off-guard

Conditional discounts can be great when you meet the condition, but can be extremely punishing when you don't. According to the industry watchdog ACCC:

...retailers often advertise large conditional discounts and many consumers end up paying a much higher price when those conditions are not met. These 'penalties' provide an excessive benefit to retailers. - ACCC, 29 March 2019

For example, if you have a pay-on-time discount and are late with a single payment, you'll not only lose the discount but be slammed with a late payment fee too.

Always check the terms and conditions

Discounts aren't always a set reduction to your bill. It's not uncommon for discounts to be delivered in credits that are applied to your bill.

Sumo Energy, for example, offers $100 in credits over 2 years, but only applies it to every third monthly bill. It pays to read the details for these kinds of discounts, since they can be applied in weird or variable ways.

What types of energy discounts exist?

While the sheer number of energy discounts out there from different providers may seem complicated, they mostly fall into just a few different categories. Usually, you'll be looking at a conditional discount, something which only applies when a certain condition is met. Here's what common discount types exist:

  • Direct debit. Letting your provider pull your bill directly from your bank account at payment time saves them administrative work and can save you money.
  • Paperless billing. Don't mind receiving your bill in your email inbox? Paperless billing can save you from paying a surcharge for the extra time and money the company has to spend printing and mailing your bill.
  • Pay on time discount. Pay your bill on time, every time, and you might be eligible for one of these discounts. Watch out though, since if you're late on a couple of payments you might not end up saving much at all. Your discount could be cancelled and you could be hit with large dishonour fees.
  • Sign-up or limited term discounts. When you sign up with some providers, they may offer you a big discount that only applies for, say, 12 or 24 months. Make sure the discount is worth it with the period offered.

The information above was last checked as correct on April 2021.

What is the reference price?

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The reference price is a benchmark price set by the Australian Energy Regulator to help make understanding prices easier in New South Wales, South Australia and South East Queensland.

It's the highest a retailer can charge a customer on a standing offer.

Victoria uses a slightly different benchmark called the Victorian Default Market (VDO) offer.

You'll often see the reference price mentioned with discounts to make it easier for you to understand how much you are saving.

Video: How to compare energy discounts on our engine

Important: Providers may change or remove discounts at any time. Always check the provider's website for what discounts are available.

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