Energy discounts aren’t always a cheaper option

BIG PERCENTAGE discounts offered to energy customers who pay their bills on time mean nothing if the price is too high in the first place; and research has revealed Australians are struggling to pay their bills regardless.

A survey of 1000 Australian adults, commissioned by Comparethemarket.com.au, revealed 57 per cent did not feel that pay-on-time discounts helped pay their bills.

For 44 per cent of these, the discounted balance was still too expensive, while 38 per cent found the pay-on-time deadline too tight.

Consumers should not pay attention to the discount, because 45 per cent off one plan might still not make it cheaper than a good value plan with no discount, warned Abigail Koch, consumer advocate at Comparethemarket.com.au.

“Energy companies typically market plans or products on discounts, not on price,” Ms Koch said. “It is tempting for customers but it means little when you don’t understand what price it is based on.”

Ms Koch said energy retailers offered discounts to recruit and retain customers, but those customers often failed to notice when the discount period ended.

“The majority of discounts are for 12 month contracts … once they’re up, you go on a standard contract,” she said. “Energy companies now have to inform customers when their discount period is coming to a close, which is great, but a lot of them let you know by email. If you don’t check your emails often, you might miss that information. “Eye-catching discounts are designed for customer acquisition, because that retailer knows once people sign up they are likely to stay loyal … when the discount period ends.”

Canstar Blue data shows a number of non-discounted energy plans across different states that are cheaper than some offering 40 per cent off.

Canstar Blue editor Simon Downes said the best way to work out which plans are really cheapest is to compare energy price fact sheets.

Mr Downes said working out a competitive usage and supply rate in your area is the key, which can still be complex.

“Comparison websites do cut through the confusion and offer a guide as to which retailers are genuinely the cheapest in your area,” he said.

“But consumers should still do their own price fact checking … if you have a huge discount plan, it may well work out a good deal, but only if you stick to the conditions.”

And pay-on-time discounts are not the only option.

“Direct debit discounts are often a safer bet,” Mr Downes said. “Some retailers simply allow you to delay your direct debit date by a week or two and you won’t lose the discount.”