Power price default market offer begins Monday, but many wrongly believe they will save money

A new electricity bill system begins today aimed at capping prices for some people — but research shows many people wrongly believe they’re going to be better off.

• Switching power companies an annual problem for many
• Tangle of electricity lines causes confusion

A new electricity bill system introduced today will deliver average price cuts of $171 for some customers, but is also likely to anger others because of confusion over eligibility for the discount.

The Coalition will make good on its commitment to lower prices today when it creates a national default market offer of guaranteed capped prices for customers who don’t understand the free-market system of around a dozen retailers, or haven’t had time to switch over.

In South Australia, it means an end — and a $171 reduction — to the standing offer which came into place when ETSA was sold and the market was opened to competition.

Only 67,576 household and 13,607 business customers are left on the safety net Standing Offer.

Around the nation, the default market offer will encompass nearly 800,000 people, but a survey of SA customers by YouGov Galaxy Research shows expectation about the new system, will not match reality.

Twenty eight per cent of SA customers think they will be getting a discount, which is far more than the 9 per cent who will.

The survey found that a significant 42 per cent of South Australians believe they are currently on a standing offer, when they have already switched to market offers.

Energy Minister Angus Taylor said the DMO would serve as a price cap for many struggling families.

“We are stopping energy companies from taking advantage of their loyal customers by artificially inflating their standing offer prices,” he said.

SA households changing to the DMO from standing offer contracts could save up to $525 and businesses $1913, with the average $171.

Laura Crowden, a spokeswoman for iSelect — which helps people switch and commissioned the YouGov Galaxy Research — said the DMO won’t reduce bills for the majority of South Australians on market offers.

“South Australians shouldn’t simply ‘default to the default’. Shopping around for the market offer most suited to your household’s needs is still the best way to save on your energy bills,” she said.

“Both the Australian Energy Regulator and the Australian Energy Council have confirmed that market offers will almost always be cheaper and that customers who remain on default offers will likely be paying more.”

Ms Crowden said the YouGov Galaxy Research also showed a hidden danger for South Australians, with many believing that the discounts which prompted them to switch providers were permanent.