Are you paying the energy loyalty tax?

Posted: 20 April 2021 3:22 pm

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Many of us think that the longer we stay loyal to a company, the better treatment and deals we'll receive. Unfortunately, the opposite happens, with an "energy loyalty tax" costing consumers up to $150-$200 extra per year in most capital cities.

Roughly 18% of electricity customers haven't switched plans, despite thinking they aren't getting good value for money, according to Finder's Consumer Sentiment Tracker. If this sounds like you, here's why you're probably paying too much and, more importantly, how you can fix it with minimal hassle

What's the downside of staying with the same provider?

Over time, several nasty things happen to your energy plan. No matter how good it was when you bought it, you might:

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Get pushed onto a standing offer.

Standing offers are far less competitive than market offers. It's possible to end up on one after a long time of not changing your energy plan.

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Lose your discount.

The majority of discounts on offer expire after just 12 months. If you've been on a plan for longer than a year, there's a good chance that you're paying more than when you first started on it.

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Get increased rates.

Retailers tend to raise usage rates over time. If you've been on the same plan for a long time, your rates have likely crept up from where they started.

All of these things together create the so-called "energy loyalty tax".

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But how much more are you paying by staying?

The answer is – a lot. Analysis of the latest AER Annual Retail Markets Report shows that there's nearly a 12% gap between the median bill for a standing offer and the median bill for a market offer. Your own gap will depend on where you live and your plan.

For most states, it's around $200 per year, but here's a breakdown of the average "loyalty tax" by capital city:

State (city)Distributor"Loyalty tax"
NSW (Sydney)Ausgrid$205.13
VIC (Melbourne)Citipower$145.80
QLD (Brisbane)Energex$194.52
SA (Adelaide)SA Power Networks$217.73

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Some of the brands we compare:

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How easy is it to switch to a new provider?

Switching energy plans is quick and easy. Here's how:

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Check for exit fees

If you're on a lock-in contract, you might want to wait until it expires to avoid paying a hefty exit fee.

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Compare plans

Our Energy Finder comparison tool shows you the cheapest plans available and gives you all the details, including discounts, deals and more.

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Sign up

Your new provider will handle the switchover for you. If you're moving house, you'll need to manually cancel your old plan and wait about three days from sign up to get connected at your new place

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