It can pay to walk the extra mile

Energy companies rely on customer complacency after they have won them over, writes Tim McIntyre

ENERGY consumers must be prepared to go the extra mile to get the best deal possible, which experts believe will come from your current provider. Simon Downes from comparison company Canstar Blue says recruiting and retaining people is essential to energy retailers, who bank on customer complacency in the years after they win them over with deals and discounts.

And while shopping around is a great place to start, a customer can secure their best offer if they actually switch providers and use the cooling off period to negotiate a better deal from their original retailer.

“The key is to convince them you’re prepared to switch and there is no better way to do this than to switch,” Mr Downes said. “Your retailer would rather make less money from you than not have you as a customer at all. Your job is to get your retailer to pull out all the stops to keep you.”

Switching and then renegotiating a better deal sounds more complicated than it is.

“When you switch there is a 10-day cooling off period during which you can change your mind and not incur any charges from your new retailer,” Mr Downes said. “This is your consumer right and there is nothing wrong with doing it. I have heard examples of customers getting double the conditional discount offered to new customers to keep them.”

Energy customers are fed up after huge cost increases in recent times. Canstar research shows the average standard offer annual bill in South Australia has increased by 20 per cent in the past year, from $2823 to $3385. Victoria saw an 18 per cent increase to $2382 and NSW a 17 per cent rise to $2569, while prices in southeast Queensland rose by 7 per cent on average to $2435. The increases are significant, but become worse when comparing standard offers to market offers, which are the best deals.

“The difference between the cheapest market offer and most expensive standard contract in NSW is $1800,” Mr Downes said. “That means there are customers paying as much as $1800 a year more than they need to. It is frightening.”

Customers agree and are voting with their feet. A recent One Big Switch (OBS) campaign saw more than 120,000 Australian households register in a bid to use people power to secure a group discount. OBS campaign director Joel Gibson said there had been larger price hikes than usual.

“Bills go up every July in most states and all the experts were predicting this price rise would be a monster because wholesale prices have doubled over about 18 months,” he said. “The Prime Minister has also put a stake in the ground, saying this parliament will be judged on how it handles the energy crisis.”

The upside of an increase in the number of customers shopping around was some better deals. “With steep price rises coming, (providers) knew they were going to lose a lot of customers,” Mr Gibson said. “They also knew those customers were all going to have to find a new energy plan. So the best discounts on the market have also increased and we’ve been able to capitalise on that.”