01.CHOICE power switching
With the increased cost of power generation, household bills are set to rise nationally over the next few years and consumers will be on the look-out for cheaper energy prices. In states where the utilities market has been fully deregulated, allowing numerous energy retailers to fiercely compete for customers, marketing has been particularly intense.
In brief
- Highly competitive electricity markets in some states have prompted unprecedented levels of consumer switching.
- Our survey reveals that discounts, offers and cheaper prices are the key drivers for switching, yet customer satisfaction often remains largely the same
Please note: this information was current as of February 2009 but is still a useful guide to today's market.
Our survey
A recent CHOICE survey of 3300 subscribers in Victoria, SA, NSW and Queensland (markets with full retail competition) asked consumers:
- If they were satisfied with the pricing and customer service of their current electricity retailer.
- Whether they had switched to another retailer, and if so, why and how.
- Whether switching had resulted in more or less satisfaction.
States where competition is not significant were not included in the survey (see Different states, different markets.) Our survey results revealed that discounts and freebies have been remarkably effective in enticing consumers to switch electricity retailers, and aggressive selling techniques have had a large role to play. In fact, Australians who have an opportunity to switch have done so more than five million times since full retail competition was introduced in 2002.
CHOICE verdict
Competition between energy retailers is intensifying, providing greater options for switching, but it pays to look closely at exactly what is on offer to ensure you get the best deal in the long term. Liberalisation of the energy market, which gives consumers strong incentives to shop around, also creates incentives for retailers to use aggressive marketing.
Consumers can sign up to bad deals, and in some cases they’re “signed up” to deals without their knowledge by overenthusiastic salespeople. While removal of the price cap on standard contracts in Victoria may stimulate competition, it will certainly leave some customers paying more than they should.