Is your provider charging you a loyalty tax?

* We do not compare all energy providers & have commercial arrangements with our partners.

Energy Saving Tips | BY Ethan Rodgers


Let’s do a little thought experiment. Imagine you’re a regular Aussie homeowner you work hard, you pay your taxes, and you’re paying through the nose to keep the lights on.

You probably won’t have to think too hard. There are a number of reasons why people are getting hosed by their power companies. But one of the big ones is a concept known as the loyalty tax.

Not sure what that is? We’re going to break it down. One of the best ways to combat it though is to contact Electricity Monster, we can help you search for a better deal quickly and easily. Just enter your details in the form above.

What is the loyalty tax?

The loyalty tax is a pretty simple concept. Let’s say a year or so ago you signed up to an energy plan, you might have been offered a discount of some sort. Maybe it was a pay on time discount, maybe it was a direct debit discount or it might have even been a guaranteed discount on your bill.

What a lot of people tend to miss is that these discounts often expire after a certain period of time. Once their discounted plan has expired, people can find themselves on a way more costly plan. Recently a new rule was put into place that requires energy retailers to let their customers know when their discount changes.

This is a positive step but it might be a wolf in sheep’s clothing for energy customers. Many people don’t pay a huge amount of attention to details like this on their power bill. This could lead to you still being stung with higher prices once your benefit period expires.

Basically, you’re gonna get it in the pocket for showing loyalty to your retailer. Does that seem fair to you? Does that seem fair to anyone? To us, it seems, deeply wrong. 

What sort of impact does it have?

More than you might think! Sticking with the same provider over the years might seem like the easy option, but it can be hard on your wallet. The ACCC has some very interesting things to say about it. Apparently, some people are on such bad plans that they could stand to save over a $1000 a year in some states, on average.

That is, if they take the time to find themselves a better deal. Despite this situation, many people are completely oblivious to the situation they find themselves in. Speaking to the Sydney Morning Herald, Canstar spokesman Simon Downes said:

“Almost two-thirds of those surveyed think they are on a good deal.”

This is despite the fact that they might be able to save hundreds each year on their power bill. This is the loyalty tax in action, and something needs to be done about it…

So… is anything being done about it?

Kind of, in a roundabout way. On January 1, a number of providers announced a drop through discounts for customers that had been on standing rates for a while. Standing rates are the basic, vanilla energy plan offered by most retailers.

This decision was welcomed by the government. Energy Minister Angus Taylor had this to say:

“Almost a million hardworking Australians, who have remained loyal to their energy retailers, have been paying the highest electricity prices on the market, known as standing offers.”

He went on to add:

“Retailers have been taking advantage of these customers’ loyalty by massively increasing their electricity prices.”

The providers that decided to enact a drop in prices included AGL, Energy Australia, Origin Energy, Red Energy, Lumo and Alinta Energy. So that’s a small amount of relief for those retailers’ customers right?

Maybe not…

Prices are still way higher than a decade ago

Let’s say you’re an AGL customer in NSW, and you’ve just seen your energy bill drop by about 10%. According to our calculations, this might save you about $211. Good news right? In the short term it is, but in the long term absolutely not.

The thing is power prices have risen by over 100% since the year 2008, far outpacing the rate of inflation. A small drop now doesn’t even come close to making up for over ten years of skyrocketing power prices.

You’re still going be paying too much for a service that you basically cannot live without. While gestures like the ones offered at the start the year are nice, they just aren’t going to cut it for a lot of struggling Australian families.

What you want to do when your benefit period is over, is come shop the market again for a better deal. We can help you with that.

Come to Electricity Monster

Hit with the loyalty tax? Don’t get mad, get a new provider!

Over the past five years, Electricity Monster has helped over 35,000 Australian families and businesses find better deals on their energy.

We can help you, too. Whether you need sharper rates or an electricity connection.

Just pick up the phone and make the call to 1300 590 513.

A member of our team will compare your current deal to the ones offered by some of Australia’s leading providers.

If we can sort you out with a better deal,  we’ll take care of the switch.

You might be saving in as little as fifteen minutes.

Or you can just submit your details in the form below.

Beat the Loyalty Tax

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* We do not compare all energy providers & plans in the market due to commercial arrangements.

Disclaimer:

This publication looks at how much a 4-person household could save, on average, on plans from AGL in NSW. The information being made available in this document cannot substitute for legally sound advice. No financial decisions should be made based on information from this publication. Individual usage, circumstances and brands could cause usage figures to vary.

Important points to note are:

  • In brief, we do not guarantee that the information provided applies to every household in Australia.
  • Significantly, all dollar figures are including GST.
  • The comparison is between a market offer that AGL offered after and prior to new law changes.
  • The plans chosen for comparison may not necessarily reflect the most competitive plans offered by AGL.
  • Specifically, comparisons have been made on the peak rates in single rate plans from retailers, plus their daily electricity supply charges.
  • Electricity rates used for calculation were taken from the websites of electricity retailers. We have not verified the accuracy of the depictions in retailer websites.
  • Chiefly, electricity benchmarks used for calculating the average kilowatt-hour usage of households.
  • For Victoria, the Citipower distributor has been used across all electricity retailers.
  • In NSW, the Ausgrid network is utilised across all electricity retailers.
  • For QLD, we have chosen the Energex network across all electricity retailers.
  • In SA, SA Power Networks distributor has been chosen for use across all electricity retailers.

1 AER submission dated Dec 2018 “Annual report on compliance and performance of the retail energy market 2017-18”

Updated by Ethan Rodgers

Ethan Rodgers

Ethan Rodgers is an energy journalist with a passion for how the electricity industry affects regular people. His key areas of interest are the energy poverty crisis and inner workings of each state’s electricity situation.

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