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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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The two main types of energy plans you may come across are:
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.
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 TERM
ONGOING CONTRACT WITH BENEFIT PERIOD
Fees for leaving the contract
None
Usually
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
Responsibility of provider
Notify you if price changes
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 may change at any time
Prices are fixed for the benefit period
Who is it best for?
You don't want to be locked into a plan
You 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.
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
We've reviewed hundreds of energy plans and written 200+ guides to help you navigate the Aussie energy market. Our experts are seen on TV, print and digital media.
In the last 3 years, we've helped over 1.39 million people compare energy plans by explaining features clearly and simplifying confusing terms and conditions.
Learn more about energy
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Maurice Thach is a publisher at Finder who covers 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.
Energy prices are expected to rise by up to 29% in QLD on 1 July 2023., but there's plenty of electricity and gas providers to choose from and potentially save money on your energy bills.
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Fees for leaving the contract
What happens over time?
Responsibility of provider
Price changes
Who is it best for?
