Written by Liam Phelan / The Sydney Morning Herald / 23 February 2019

It is the question almost a third of Australians haven’t asked their electricity provider – and the answer could save more than $200 off your annual bill.

Retailers offer two types of contracts: standing offers and market offers.

These standing offers currently vary by hundreds of dollars between retailers and are the automatic default power contract.

Unless you ask, you default to a standing offer. Even customers with a market offer are dumped back to a standing offer at their contract’s end unless they renegotiate.

According to the Australian Energy Regulator (AER), 27 per cent of Australians are on standing offers. In NSW, 40 per cent of the big three retailers’ revenue comes from standing offers.

However, these offers will soon be a regulated capped price, stopping unwary consumers being slogged more and making power bill discounts less confusing.

Energy consultant Martin Gill said ahead of the introduction of a regulated price a better name for standing offers would be “maximum tariff”.

“The idea was competition would lead to cheaper prices, but what has actually happened is it has led to consumer confusion and it is totally impossible to meaningfully compare tariffs,” he said.

Previously, retailers had set enormously high standing offers to provide greater “discounts”, although this will soon be abolished with the new price cap..

Gavin Dufty, from St Vincent de Paul, said power companies had exploited consumers confused about electricity prices.  “Most people on standing offers were being dudded,” he said.

He said consumers researched cheap deals for car registration but not electricity: “If you sit down for an hour, you can save $300. Do it at the same time as your rego. It will pay for the rego.”

It pays to shop around

Ask your power company for their best deal and compare retailers. In NSW, there is a choice of 24 but some are the same company with different names.

Dr Gill said many price comparison sites get kickbacks from retailers so don’t offer the best deal. The federal government has an energy made easy website while Service NSW provides a free consultation.

The regulated price will now cap standing offers and act as a reference price you can use to compare discounts, taking some of the mystery out of what your discount is actually on as there is now a common price benchmark.

Federal Energy Minister Angus Taylor said government pressure on retailers meant power companies reduced or froze standing offer charges in NSW, Victoria, south-east Queensland and South Australia on January 1. But he conceded there was work to be done.

“The Morrison Government has asked the Australian Energy Regulator to develop a reference bill to be implemented by 1 July 2019 in every region not already subject to regulation of standing offers,” he said.

“A reference bill will provide a clear benchmark against which families and businesses can compare their own bills with ease.”

Dr Gill said the government claimed 50 retailers competing must be a good outcome. “It’s not the number of retailers, it’s how well-educated consumers are to choose.”

Many retailers also offer additional benefits, such as movie tickets or frequent flyer points, as incentives to change supplier.

Costs: fixed v usage

Retailers divide bills into two charges: fixed (poles and wires and green taxes) and variable (how much you use and wholesale costs).

Mr Dufty said householders need to establish how much power they use. If you consume a lot, you need a deal with higher fixed, but lower variable costs. If you are a low usage household (if you have solar panels) you should opt for lower fixed costs.

“There are big differences between retailers. But people don’t realise how much of an impact the difference between fixed and variable costs can make,” Mr Dufty said.

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