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Energy Contracts: How they work in Australia

When you take out a plan with an energy retailer, there are actually several kinds of contracts you might run into, each with their own rules, quirks and terms.

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Maurice Thach

Updated

Fact checked

The two main types of energy plans you may come across are:


energy icon
Plans with no contract term:
These are open-ended plans which continue until you or your provider decides to cancel them. These have no exit fee associated with them.

contract icon
Ongoing contract with a benefit period:
You have a benefit period (the benefit is usually discount or items like free movie tickets). Once the contract finishes you usually lose the benefit but the contract will continue.

Energy contracts: How do they compare

PLANS WITH NO CONTRACT TERMONGOING CONTRACT WITH BENEFIT PERIOD
fees iconFees for leaving the contractNoneUsually
contract iconWhat happens over time?Plan continues unless it's cancelledRetailers will either roll over your plan with a new benefit period (either with the same benefit or a new benefit) or they will continue the contract with no benefit
responsibility iconResponsibility of providerNotify you if price changesMust tell you your benefit is ending or if they are rolling over your plans with a new benefit at least 20 business days before it happens
Price up iconPrice changesPrices may change at any timePrices are fixed for the benefit period
review iconWho is it best for?You don't want to be locked into a planYou want to get prices locked in for a period of time and don't mind a contract that continues indefinitely

We've explained each contract in greater detail below to help make sure you know what you're getting into when shopping for an energy plan.

Plans with no contract term

Plans with no contract
  • Fees for leaving contact
No
  • What happens over time?
Plan continues unless it's cancelled.
  • Responsibility of provider
Notify you if prices change.
  • Price changes
Prices may change at any time.
  • Who's it best for?
You don't want to be locked into a plan.

Finder survey: How many Australians know what type of electricity tariff they are on?

ResponseWAVICSAQLDNSW
Single rate tariff47.86%31.23%26.58%32.29%30.85%
I don't know35.9%38.6%37.97%39.46%38.3%
Time of use tariff11.11%17.19%16.46%9.87%16.2%
Time of use + controlled load tariffs5.13%12.98%18.99%18.39%14.65%
Source: Finder survey by Pure Profile of 1145 Australians, December 2023
Data for ACT, NT, TAS not shown due to insufficient sample size. Some other states may also be excluded for this reason.

Ongoing contracts with a benefit period

Ongoing contract with benefit period
  • Fees for leaving contact
Usually
  • What happens over time?
Retailers will either roll over your plan with a new benefit period (either with the same benefit or a new benefit) or they will continue the contract with no benefit.
  • Responsibility of provider
Must tell you your benefit is ending or if they are rolling over your plans with a new benefit at least 20 business days before it happens.
  • Price changes
Prices are fixed for the benefit period.
  • Who's it best for?
If you want to get prices locked in for a period of time and don't mind a contract that continues indefinitely.

Which contracts lock you in?

While the energy market used to have quite a few energy contracts with set periods and exit fees, this is no longer the case. Finder's latest search of energy plans on the government's comprehensive plan database, Energy Made Easy(1), returned zero plans with exit fees in NSW.

It's still worth double-checking when you sign up, but on the whole you don't need to worry about being locked into a contract.

Standing offers vs Market offers: What's the difference?

If you're comparing energy you may have come also across the following terms: Standing offers and Market offers. Our infographic below helps explain the difference.

Standing offers

  • Retailers are required to provide a standing offer
  • Terms and conditions set by Government
  • Rates are capped so that you don't pay an unfair amount
  • Your price can't change more than once per six months
  • Usually no discounts or incentives when you sign up
  • Usually more expensive than market offers

You may be on a standing offer if:

  • Your market offer has expired.
  • You never applied for a market offer.
  • You moved.
  • You took up a standing offer on purpose.

Market offers

  • Plans are competitive in terms of price.
  • Discounts and incentives are sometimes available.
  • Terms and conditions set by the retailer
  • Price can change whenever (on certain types of contracts
  • Retailer doesn't have to tell you before they change the price, but they must tell you before the next bill.

You may be on a market offer if:

  • You have actively switched to a market offer online or with your retailer.

Video: How to use tariffs and fees to compare energy

Learn more about energy

Our energy guides can help you compare and understand what plan is best for you.

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Maurice Thach was a publisher at Finder who covered anything that sounds hard to compare. This includes life insurance policies, side hustle ideas and energy plans. Maurice has a Bachelor of Commerce from the University of New South Wales, a Tier 2 General Insurance certification and a Tier 1 Life Insurance certification. Outside of work, you'll probably find Maurice hitting up the nearest basketball court. See full bio

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