With so many providers and deals to pick from, choosing the right energy bill can be a bit of a minefield and it can be difficult to know whether you’re getting the best deal available or actually paying above the odds for your supply.
And, while it may seem like there are a never-ending supply of discounts and offers, around 15 per cent of Australians are currently on standing offers, which are more expensive than the cheapest market offers available.
Things are set to change next month though with the introduction of new Default Market Offers (DMO) prices, which have been set by the Australian Energy Regulator (AER) and are due to come into effect from July 1.
Jessie Petterd, spokesperson for price comparison site iSelect, told Starts at 60 that the switch from standing offers to these new default offers will save customers between $120 and $500 per year, depending on which state or territory they live in.
So, before the changes come into effect, here’s everything you need to know about default offers.
The first thing to do is to check what type of offer you’re currently signed up to. Recent research by iSelect found that 41 per cent of people believe they are on standing offers, however this is far from true as the actual number is closer to 15 per cent nationwide.
You can check which plan you’re on by calling your provider and simply asking, or you can also make use of comparison sites such as iSelect or Compare the Market which can help you to figure out what deal you are on.
“Generally discounts or market offers do expire after 24 months so, if you haven’t reviewed your plan within the last two years, you’re more than likely on those more expensive standing offers and you will be rolled onto the default offer,” Petterd said.
When it comes to energy, it is important to be aware that there are two types of deals. The most common deals are market offers which, Petterd explained, are the ones you typically see advertised.
“Market offers are generally the retailer’s best available plan,” she added. “So if you’re getting a discount of any kind, you’re on a market offer.”
Then there are standard offers, which are the plans that customers automatically roll onto when their discount period comes to an end. For example, if you sign up with a provider and take advantage of an offer which applies for a 24-month period, at the end of two years you will be transferred to a standing offer, unless you take the time to seek out a better deal or switch providers.
Petterd added that older Australians are more likely to be on these plans as they may be less inclined to spend time shopping around for a better deal, or simply unclear on how to do so.
Default offers – or the Victorian Default Offer, as it will be known in the Education State – have been introduced to replace existing standing offers, following recommendations put forward by the Australian Competition and Consumer Commission (ACCC).
On July 1 this year all customers who are currently on a standing offer will automatically be transferred to the new Default Market Offer.
“These offers are basically designed to make energy bills cheaper for those who are currently on standing offers,” Petterd said. “It will protect vulnerable Australians, such as the elderly or those who perhaps have a language barrier or, for whatever reason, have decided not to shop around.
“The introduction is great news for the 10-15 per cent of customers who are on those more expensive standing offers because they will see a decrease in their bills. However it is really important that they remember that these default offers are generally more expensive than a market offer. So the best way to make sure you’re getting a good deal is to still shop around.”
The Default Market Offer only affects customers in South East Queensland, New South Wales, the ACT, Victoria and South Australia. Different rules and regulations apply in the Northern Territory and Western Australia, while businesses in Tasmania will benefit but not residential customers. The full list of tariffs can be found on the AER’s website.
If you are one of the 10-15 per cent of Australians currently on a standing offer, then you don’t need to do anything in order to take advantage of the new default offers as you will be transferred automatically on July 1.
However, it is important to bear in mind that you could still save more money by looking elsewhere and scoping out a new deal.
“We are encouraging people not to default to the default,” Petterd told Starts at 60.
“Shopping around is always going to be your best bet … because these default offers are still going to be more expensive than the market offers.”
If you’re unsure which energy deal is most suited to your needs, you can compare plans and prices on the government’s EnergyMadeEasy website by clicking here.
Important information: The information provided on this website is of a general nature and for information purposes only. It does not take into account your objectives, financial situation or needs. It is not financial product advice and must not be relied upon as such. Before making any financial decision you should determine whether the information is appropriate in terms of your particular circumstances and seek advice from an independent licensed financial services professional.