Energy discounts in Australia

When you’re searching around for a new energy plan, it’s easy to be distracted by the shiny offers and discounts providers might promise. The question is, which of these offers are marketing and which are genuine, useful discounts?

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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.

What types of energy discounts exist?

There are several standard discounts a retailer may provide when you take out a plan with it. For the most part they're conditional, requiring something to be true for them to apply. The discounts you're likely to come across are:

  • Direct debit discount: This applies if you allow your provider to directly bill your account without needing the go-ahead from you every time. You're likely to save a bit of money off your bill because the company won't have to chase down your payment and remind you every time.
  • Paperless billing discount: The company saves time and money when it doesn't have to mail your bill to you each time, so it will pass you an easy discount if you receive your bills electronically.
  • Pay-on-time discount: This applies if you pay the full bill on time, every time. Be careful around these – if you think you're likely to be a touch late with a bill or two, you might go for a different plan so you don't get stuck with a large dishonour fee.
  • Sign-up or limited-period discounts: These are special discounts offered by companies to entice people into signing up with them. While these can be pretty hefty, you should always check the period of the discount to see if it's worth it.

Credits or discounts?

Some providers will offer their 'discount' as credits. So for example, Sumo Energy offers:

$100 in credits on your electricity account over 24 months if you pay on time.

Read the T's and C's

One thing to be aware of however is the terms and conditions when it comes to credits. In the Sumo Energy example, they will pay back their credits every third monthly bill.

The amount you get back may also vary based on the type of discount you are attempting to receive e.g. Bundle, Pay on time, etc.

The information above was last checked as correct on October 2019.

Rates first, discounts second

Discounts are appealing because everyone likes to feel like they've saved, but you should never purchase a plan based on discounts alone. What matters most is the rates (at which you're being charged for electricity) that the company is offering. This is for two reasons.

1. Discount length

First, some discounts (commonly phrased as 'benefits') are temporary. A company may offer you a hefty discount when you sign up, bringing what you're paying down below a competitor with a lower base rate. However, this decrease could evaporate 12 months later, leaving you stuck in a plan where you're now paying way above what you could get from another provider.

2. It might be conditional

Remember, you'll need often meet the condition to unlock the discount. This penalises you (and sometimes quite a lot) if you don't meet the conditions.

Be careful of large conditional discounts

Consider whether you'll be able to always meet the condition. If not, you might find yourself paying lower rates for a while and then seeing your rates skyrocket up above competitors because you missed a payment, for example. It's entirely possible you're better off with another plan without the conditional discount.

...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

And as usual, check the rates. You might be paying a low flat fee for your electricity, but have high usage and supply rates. Deals may not always be as good as they appear at first.

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.

The state of 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.

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