New investigation shows inconsistent results short-circuit consumer savings
CHOICE says some consumers could end up out of pocket by more than $300 because of inconsistent results from energy switching websites.¹
The finding comes from a CHOICE investigation into six NSW-based commercial energy switching sites, which has been lodged as the first-ever ‘super-complaint’ under a pilot project with NSW Fair Trading.²
“Our investigation shows that even if you enter the exact same information into these switching sites, you can end up with very different versions of the ‘best’ deal, and that has the very real potential to leave households worse off,” says CHOICE CEO Nick Stace.
“Energy costs have increased sharply around Australia, and there has never been a more important time for services like switching sites to cut through the complexity and help households find more competitive deals,” says Mr Stace.
“Unfortunately our research has found systemic issues with the transparency, accuracy and range of deals offered by some operators.
“For example, some sites don’t display basic information about terms and conditions, like whether late fees, account establishment fees and moving home fees apply, while others appear to only offer a small selection of the market.”
Based on these findings, CHOICE is calling for:
- Regulators to investigate whether any switching site operators are engaging in misleading or deceptive conduct;
- Implemention of a code of conduct or accreditation system for commercial switching sites; and
- A project similar to the UK Midata project, giving consumers access to their own consumption data to try and find a better deal.
“An accreditation scheme would help consumers identify those sites that are genuinely transparent and comprehensive, and help drive competition through smarter switching,” Mr Stace says.
“We also believe it’s time to start using some of the data collected about consumers’ purchasing decisions to help them reduce bills, turning the tables on those businesses that rely on complexity and confusion.
“The UK’s Midata project is an innovative step down that path, and there is no reason why Australian consumers should not have the same benefits.”
CHOICE’s NSW super-complaint ‘Between a door-knock and cyber-space: the problems with electricity switching sites’, follows a study of Victorian energy switching sites commissioned by the Consumer Utilities Advocacy Centre in 2011, which also identified issues around transparency and comprehensiveness.
“The Victorian experience shows that problems with switching sites are not unique to the NSW energy market, nor are sharp electricity price rises, and CHOICE calls on regulators in other states to take similar action,” says Mr Stace.
More details of CHOICE’s investigation into NSW electricity switching sites are available on choice.com.au.
NSW Fair Trading, under the super complaint process, will publicly respond within 90 days to CHOICE's super complaint which is being lodged today.
- Matt Levey, CHOICE Head of Campaigns: 0488 214 066
- Ingrid Just, CHOICE Head of Media: 0430 172 669
¹For example, a typical consumer in Taree, NSW could save an estimated $300 a year approximately on their annual electricity bill if they used one switching site compared to another switching site as the sites recommended different plans based on the same input.
²The super-complaint process allows CHOICE to bring forward evidence of issues harming NSW consumers, and requires the regulator to publicly respond within 90 days, providing a powerful avenue for consumer groups to focus attention on systemic problems in markets.
CHOICE’s switching sites:
CHOICE operates its Compare, Ditch and Switch site located at choice.com.au as part of its Better Banking campaign. The service, powered by Mozo.com.au, enables consumers to objectively compare credit cards, home loans, savings products and transaction accounts. CHOICE does not receive any payments as part of this service.
CHOICE operated CHOICE Switch from August 2008 to March 2010. CHOICE Switch allowed the user to compare gas and electricity providers by postcode. CHOICE received a standard flat fee from electricity providers for customers that switched using CHOICE Switch. There was no other fee payable by users for the service. CHOICE compared all available providers and plans. However, a user was only able to switch to the plans by providers with whom CHOICE had a commercial arrangement.