Cheap power price deals on offer as retailers are exploiting power price reforms to rip off families

These are the cheapest power prices on offer in NSW, Victoria, Queensland and South Australia as families face being ripped off on their bills. SEE THE LIST AND COMPARE

Exclusive: Families that have tried to find a decent deal on power face paying hundreds of dollars a year more as greedy retailers game reforms meant to bring down bills.

News Corp Australia can reveal providers have exploited vagueness in the July 1 changes to hide usage charge hikes of as much as 57 per cent.

While that is the most extreme jump, in several areas of the nation the average increase has been more than 5 per cent. This could cost some suburban families up to $200 annually.

“The more power you use, the worse a deal you’re getting,” said leading comparison service Canstar’s energy spokesman Simon Downes.

“It is especially important that families or any large households put some time aside to review their electricity plan.”

It was Canstar that identified usage charge increases of up to 57 per cent on “market offers” — the type of deal four out of every five households are on.

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Power bill shocks have been commonplace in Australia. Source: ThinkStock

Mr Downes would not say which retailer had hiked its usage charge to this extent.

Canstar found there had been falls in the other charge that makes up bills — the daily connection fee.

However this has a relatively small impact on all but low-use households.

The bill banditry has emerged as new data from the Australian Energy Market Operator shows the number of households changing provider slumped by 24 per cent in July compared to a year earlier.

The AEMO refused to comment, but analysts at investment bank Macquarie said the decline was due to the recent reforms, which have had the effect of reducing headline discounts.

Macquarie has estimated the fall in “churn” would deliver AGL a saving of up to $80 million.

AGL has just 12 per cent of the market, meaning collectively, power retailers could benefit by hundreds of millions of dollars.

“It costs money to retain customers,” Macquarie’s Ian Myles said.

“So you can have fewer people in the call centre.”

Canstar’s Mr Downes and others said a public information campaign was desperately needed to help households understand the key elements of the reforms, such as the reference price.

Many people are oblivious to the consequences of the reforms for their bills. Source: iStock

The reference price is the regulated rate from which all discounts must now be calculated.

For each area it is based on a set amount of usage — typically about 4000 kilowatt hours annually — which is less than most families use.

A retailer advertising a deal is 10 per cent cheaper than the reference price only needs to ensure this is true for that set amount of usage.

Many have structured their plans, including existing tariffs, to have lower connection fees and higher usage charges.

A larger household on such a plan could end up paying more than the reference price, which is supposed to act as a price cap plus make it easier to compare offers.

“There has been very little education on how the reference price works and what it means for households,” Mr Downes said.

Federal energy minister Angus Taylor said the government continued to “urge energy customers to call their provider and ask for a better deal”.

Mr Taylor answers a question in parliament earlier this month. Source: AAP Image/Mick Tsikas

Mr Taylor said the Government’s “Powering Forward” campaign had led to record levels of switching in 2018-19.

He claimed Canstar’s pricing analysis hadn’t accounted for seasonal trends and looked at less than two months’ data.

Mr Downes said it had compared prices before and after the reforms took effect.

The Australian Energy Council, which represents electricity retailers, said “given the range of market offers available, we recommend customers use one of the online government comparators to find the best deal”.

The council was provided with Canstar’s research but said it couldn’t comment.

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Originally published as Cheap power price deals on offer as retailers are exploiting power price reforms to rip off families