Are You Paying the Loyalty Penalty? Save on Electricity Now

Australia's electricity landscape is evolving, and with it comes an opportunity to save on household energy costs. If you haven't looked at your electricity plan in the last 12 months, you might be paying more than you need to—up to $238 more a year, to be exact. This "loyalty penalty" often affects households on older offers, as new plans tend to offer better value.  

This blog will show you how to identify if you're paying the loyalty penalty and provide actionable steps to start saving on your electricity bill today. 

What is the Loyalty Penalty?

The loyalty penalty refers to the extra cost households incur by staying on outdated electricity plans rather than switching to newer, cheaper offers. According to the ACCC's Electricity Inquiry Report, households on plans more than a year old are paying, on average, $238 more annually compared to those who switch. Over three years, this penalty only increases as electricity prices fall (based on flat rate offer prices).

Source - ACCC

Why Does This Happen?

Energy providers often introduce competitive offers to attract new customers. However, existing customers are rarely informed of these lower-priced options. Households that don’t regularly compare offers or negotiate with their provider can end up stuck with higher rates. 

The Numbers You Need to Know

• Savings Potential: More than 80% of Australian households in NSW, VIC, SA, and SE QLD could save by switching to a cheaper electricity plan. 
• Price Trends: From 1 August 2023 to 1 August 2024, electricity prices fell, but many households are still missing out on these savings. 
• Impact Over Time: Our Electricity Inquiry report found that households on offers more than a year old are paying $238 more per year than those on newer offers. The size of this 'loyalty penalty' increases with the age of the offer, as shown by examining 3 years of flat rate offer prices. 

If you’ve been loyal to your provider, it’s time to reconsider. Loyalty, in this case, doesn’t pay—it costs. 

How to Save on Your Electricity Bill in 6 Simple Steps 

1. Check Your Current Electricity Plan 

Start by reviewing the details of your current electricity plan. Look for: 

• Rate per kWh (kilowatt-hour) and daily supply charges 
• Contract end dates or rollover terms 
• Discounts or perks (to determine if they are still valid) 

If these details seem unclear, don’t hesitate to contact your provider for clarification. 

2. Compare Energy Plans Online 

Using trusted energy comparison tools like Electricity Provider or Econnex, enter your location and energy usage to explore current offers. Pay attention to: 

• Flat vs. flexible 
• Renewable energy options 
• Total estimated monthly costs 

Some platforms like Energy Made Easy or Victorian Energy Compare are government-approved tools designed to help Australians find better deals on their electricity plans. 

3. Call Your Provider 

If a better deal exists, call your current provider first. Explain the lower rates you've found and ask if they can match or beat it. Providers often have retention offers that they don’t advertise publicly. 

Pro Tip: Highlighting your loyalty can sometimes get you a "hidden" discount. 

4. Consider Renewable or Green Energy Options 

Switching to renewable energy plans not only helps the environment but can also be affordable. Many retailers offer green energy option along with compatible rates. 

5. Review Your Energy Usage 

Lowering your electricity bill isn’t just about switching plans—it’s also about reducing consumption. Focus on energy-efficient appliances, smart thermostats, and simple habits like turning off idle devices. 

6. Make the Switch Seamlessly 

If your current provider can’t offer a better deal, choose a new plan through the electricity comparison tool and switch. Most providers handle the transition without disrupting your electricity supply. Consumer protections ensure you won't face additional fees or power outages when switching. 

The Benefits of Switching Electricity Plans 

Switching isn’t just about lower costs—it’s about smarter energy use and aligning with your household’s current needs. Here’s how making the switch benefits you: 

• Immediate Savings: New plans often come with promotional rates, saving you money from the first bill. 
• Transparency: Modern plans frequently include better billing and usage tracking, giving you more control over your energy use. 
• Sustainability: Many newer plans focus on renewable energy, reducing your household’s carbon footprint. 

Addressing Common Concerns About Switching 

“Will switching electricity providers cause disruptions?”  

No, your electricity supply will remain consistent during the switch process. Only your billing will change. 

“What if I don’t like the new plan?”  

Most providers offer cooling-off periods, allowing you to change your mind penalty-free. 

“Is switching complicated?”  

Not at all—comparison websites and providers streamline the process, making switching faster and easier than ever before. 

Take Action Today and Save 

The Australian energy market presents a unique opportunity for households to save – if you're proactive. With over 80% of households potentially able to find cheaper electricity plans, doing nothing could cost you hundreds of dollars each year. Don’t wait for your provider to offer you a better deal—take control of your electricity plan and start saving. 

Are you ready to make the switch? Explore energy plans today to compare and save. With just a few clicks, you could say goodbye to the loyalty penalty and hello to substantial savings.