We all know electricity costs are on the rise, but could you be paying less? When it comes to power prices, maximum may be the new minimum for some providers.
The Australian Competition and Consumer Commission (ACCC) is urging households and small businesses to contact their energy providers to ask if a cheaper plan is available.
The commission's move comes in light of the fact that some providers have raised prices 10-20 per cent above the regulated safety net.
The safety net
Designed to protect disengaged customers, the electricity price safety net establishes pricing rules that limit how much companies can charge customers on these plans, which are known as standing offer contracts.
In New South Wales, South East Queensland, and South Australia the regulated standing offer is called the Default Market Offer (DMO). In Victoria it is called the Victorian Default Offer (VDO).
While everyone has the right to be on a standing offer contract, providers are not obligated to move customers on to one when market offer contracts are raised above the safety net.
About 10 per cent of residential customers in Australia are currently on standing offer contracts, compared to about 90 per cent who are on market offers.
ACCC commissioner Anna Brakey said as a result, many Australians are likely paying more than they need to.
"We are seeing evidence of a significant reversal in the role of the safety net price, which was designed as a maximum price to protect disengaged consumers but is becoming a cheaper option for many people," Ms Brakey said.
"The Government safety net price for electricity is there to protect you, and you should not be paying more than it."
Ms Brakey urged all customers who are currently on market offer contracts or are unsure about the offer they are on to contact their provider and ask how their plan compares to the regulated standing offer.
Energy companies are obliged to display the percentage difference between plans they offer and the regulated standing offer, which is called the reference price.
An average household with average energy consumption that is paying 21 per cent above the reference price could save about $400 a year by moving to the regulated standing offer or $600 per year by moving to market offer which is 10 per cent below the reference price.
Do you need a new provider?
According to recent ACCC analysis, 90 per cent of current market offers are below the reference price. Some smaller retailers are offering relatively large discounts.
Ms Brakey said a switch in provider could lead to savings, as the cheapest market offers appear to be reserved for new customers.
She also recommended the use of Government comparison sites Energy Made Easy, or Victorian Energy Compare for Victorian residents, when weighing up options.
"Moving to a cheaper plan through your existing energy company is the easiest way to save money... but there can be greater savings available for those who are willing to switch."
For more information on electricity prices and plans click here.