Energy Contacts: How they work in Australia

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

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The three energy plans you may come across are:

  • Plans with no contract term: These are open-ended plans which continue until you or your provider decide to cancel them. These have no exit fee associated with them.
  • 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.
  • Contracts with a term: These fixed-length plans that end when the term of the contract finishes. Term contracts may start on cheaper rate.

Energy plan types in Australia compared

TypePlans with no contractOngoing contract with benefit periodContract with a term
  • Fees for leaving contact
NoUsuallyUsually
  • What happens over time?
Plan continues unless it's cancelled.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.When the contract ends a retailer will put you onto a 'standing offer - rates are usually higher.
  • Responsibility of provider
Notify you if prices change.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.Must tell you when the contract term is about to expire.
  • Price changes
Prices may change at any time.Prices are fixed for the benefit period.Prices may change during term.
  • Who's it best for?
You don't want to be locked into a plan.If you want to get prices locked in for a period of time and don't mind a contract that continues indefinitely.You want a contract that last for a fixed period and which sometimes has a cheaper rate.

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.

1. Ongoing contracts with a term

When you take out one of these ongoing contracts, you determine the lifespan of the plan, usually around a year or two. After the agreed-upon time has passed, the contract comes to an end and you'll be placed on your retailer's standing offer prices.

With most providers, energy prices can still change during the term of the contract, but they will usually be lower than what you would receive outside the contract on a standing offer. These agreements tend to have cancellation or exit fees if you back out early and your provider has to tell you when your contract is about to expire.

2. Plans with no contract term

In contrast to a fixed-term contract, these plans can go for any length of time until you or the provider cancel it. Some of these contracts may include discounts or other bonuses, but don't expect fixed rates – energy rates can vary on these plans with little notice.

Because they have no cancellation fees or fixed length, it's a good idea to check other offers regularly to see if you can get something better.

3. Contract with a benefit period

These contracts are much like any other energy contract, but also include a specific benefit period, which could be something like 6 or 12 months. During this period you receive a specific benefit offered by your provider: often a discount on your prices, but sometimes unrelated extras like movie tickets.

Once the benefit period is over, the plan continues on unchanged, except that you stop receiving whatever the benefit was. Some providers may automatically renew the benefits once the period is over, or you can look around to find a new or better offer. Either way, your provider must notify you at least 20 days before your benefits run out.

Be aware that benefit period contracts can still include exit or cancellation fees like ongoing term contracts. Make sure you know what you might get locked into when you sign up for any of these contracts.

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