Energy retailers clawback customers with cheaper offers once they switch
SMALLER energy retailers are fed up with bigger providers luring back customers who switch to a new provider. This is how they are trying to lure consumers in.
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A DAVID and Goliath battle is playing out in the energy market — and customers wanting a better deal on their power bills are caught in the middle.
Smaller energy retailers, shaking up the market with cheap deals for new customers, are being trumped at the eleventh hour by bigger retailers matching the discounts they are offering.
And News Corp can reveal the impact, with smaller retailers losing between 10 to 15 per cent of new sign ups because a customer’s old retailer — often a much bigger provider — is successfully luring them back.
The main tactic — that has raised the ire of the consumer watchdog — is giving departing customers a cheaper deal once they are notified they are leaving.
Smaller retailer GloBird’s chief executive officer John McCluskey labelled it an “underhanded tactic” that should be “stamped out.”
“There is clearly a sneaky anti-competitive practice and consumers deserve better,” he said.
“The regulator needs to step in.”
GloBird operates in Victoria and is planning to move into NSW in 2019.
Latest figures show the “churn” rate in the energy industry — where a consumer switches retailers — is on the incline.
In June 2017 it showed the rolling 12-month average of customers moving was about 20 per cent.
This compares to 23 per cent in the 12 months to June 2018.
The chief executive officer of another smaller retailer, who did not wish to be named, said he was fed up with losing new customer sign ups by sneaky retailers sucking them back in at the last moment.
“People should ask their retailer to back date these new offers when being lured back,” he said.
“Why are some retailers penalising loyalty.”
In the consumer watchdog, the Australian Competition and Consumer Commission’s latest energy recommendations, it has moved to get rid of these tactics.
Instead retailers will only know a customer has moved on the actual date of transfer.
At the moment retailers are given a 10-day window of the customer shifting from one retailer to another.
It is during this period they often try and “save” the customer from leaving.
Earlier this year News Corp revealed retailers kept their best deals secret from customers and only wheeled them out when they learned they were switching.
The ACCC’s chairman Rod Sims recently said customers were paying too much for their electricity after completing an 18-month investigation and review of the sector.
The ACCC’s latest report had 56 recommendations and Mr Sims said if they are all adopted customers could see savings of 20 to 25 per cent to their bills.
Just last week the ACCC launched a seven-year long, rolling investigation into electricity prices and the profits of energy companies.