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Let’s do a little thought experiment about tax.
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.
You might not have heard of it, but it’s been causing a lot of pain for a lot of people.
People are paying way more than they should be and it’s past time something was done about it.
If you’re looking to avoid this completely voluntary tax, get in touch with Electricity Monster today.
We can help you out.
However, right now we’re going to break the loyalty tax down and let you know how you can handle it.
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.
READ MORE: Simply vs AGL? We know who’s best…
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…
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?
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.
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.
Just pick up the phone and make the call to 1300 232 848.
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.
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:
1 AER submission dated Dec 2018 “Annual report on compliance and performance of the retail energy market 2017-18”