Energy customers wasting $2400 a year
AUSTRALIANS may be in the dark on energy, with new research revealing more than half of the nation's households believe they get a good deal on electricity.
An exclusive Canstar Blue survey of 7000 customers found that 55 per cent of respondents believed they were on a good energy wicket, while only one in five shopped around and went with the best deal.
Canstar Blue editor Simon Downes said the ever changing nature of the energy rate environment meant that anyone who had signed on more than a few months earlier was probably no longer on as good a deal as they thought.
"Quite a few have probably fallen into the trap of thinking they're on a good deal when they're not," Mr Downes said. "They may have signed on six months ago and are assuming the deal is still good, but everything is changing so quickly."
People need to realise that variable rate deals are not the same as for a mortgage, where rate changes are well publicised.
"You can sign up to a good variable rate energy deal and two weeks later, everything changes," Mr Downes said. "Make sure you read all the details. A variable rate plan means the rates can change anytime, at the retailer's discretion."
The gaps between the best and worst deals can be significant. In most states, it is more than $1000, but in Victoria, it is a stunning $2400.
"That means there are some people out there spending $2400 a year more than they need to," Mr Downes said.
The main reasons people chose providers in the first place were either that they had shopped around for the cheapest option and signed on (21 per cent), or had simply been attracted by a big discount or other sign-up incentive (also 21 per cent).
"The biggest conditional discount we have seen is 43 per cent, which is fine, as long as you've compared base prices," Mr Downes said. "A big percentage discount may not mean it is cheaper than the others."
The survey also revealed 23 per cent of customers had switched providers in the last two years, but Mr Downes said there was no point switching unless it was to a better deal.
"Only those who are engaged and shopping around are benefiting from it," he said. "Those not engaged are probably some of the most vulnerable; the elderly and those who don't understand. Unfortunately these are the ones who are probably paying more."
Price, ease and fairness are the three main factors for customers looking to switch energy providers, according to One Big Switch campaign director Joel Gibson.
"All providers sell the same electricity," Mr Gibson said. "They compete on price and customer service only."
People are attracted to simplicity, which is where ease comes in.
"They will often opt to stay with their current provider if offered a better deal," Mr Gibson said.
"This works in favour of the more established providers as they currently have most of the customers. But to get the best offers, from the established players or the new challengers, you have to be prepared to move in the first place."
Fairness, or perceived lack of, is a motivator for those looking to switch.
"The Federal Government estimates 2 million Australians are on poor power plans and may not even know," Mr Gibson said. "When these people learn they are being taken advantage of, they often switch as a matter of principle."
Finder.com.au editor in chief Angus Kidman said it is important customers recognise they have power over retailers.
"Australia has a competitive energy market, which means that energy retailers will do almost anything to try and sway customers, including offering perks like free movie tickets and events vouchers" Mr Kidman said. "Offering an incentive doesn't automatically mean an energy deal is bad, but you shouldn't base our decision entirely on those offers. Look at the long-term costs and take the incentive as the cherry on top."