Need to know
- With the help of our members and supporters, we're working to protect Australians from unfair financial penalties on energy bills
- The common discounting practice is confusing the market and costing people hundreds of dollars a year
- We’ve recently made a submission to government to implement changes to the laws and regulations surrounding this issue
Looked at your electricity bill recently and noticed how much the 'If you pay now' amount differs from the actual total of your bill?
It's now almost standard practice for energy providers to include a large late payment fee that can be up to 43% more than the total bill if you don't pay by a certain date.
"Although it seems that energy retailers are doing a good thing by appearing to offer customers a discount for paying on time, this isn't the case. We think this practice is harsh and unfair on people who may not be able to pay their bills on time," says CHOICE Policy and Campaigns Adviser, Linda Przhedetsky.
"Every household deserves access to fair, affordable energy. Australians already pay some of the highest energy prices in the world, and by dressing these fees up as 'pay-on-time discounts', energy companies are hiding the fact that they're prepared to charge people even more for not paying on time. We should call them what they are: penalties for not paying by a certain date."
Energy suppliers are charging people obscene late payment fees that cause bills to skyrocket.
The unfair discounts costing Australians
Research shows that people are unable to pay their bills before the due date 27% of the time, and that number grows to 59% for people experiencing hardship.
"These discounts also make it really difficult for us to compare prices from different providers to ensure they're getting the best deal. Electricity companies often trick people into signing up for contracts with conditions they can't meet," says Przhedetsky.
When selecting a new provider, we're very likely to be swayed by the offer of discounts. 2017 research shows that 84% of Victorian consumers considered discounts 'very important' in their decision to switch retailers. At that time, 78% of offers by electricity providers to entice new customers included conditional discounts. In 2019, conditional discounts are tied to almost half (47%) of new offers.
Working together with our supporters
This issue is one we've been fighting since 2018 and we're making some progress. The government is proposing to put an end to this predatory pricing practice, and we recently made some recommendations to the Australian Energy Market Commission's (AEMC) report to ban these discounts and put better regulations in place.
"Any energy discounts should be fair, accurate and helpful, instead of punishing people who are suffering hardship, or even simply forgetful," says Przhedetsky. "Even if you're just one day late paying your bill, you could be liable for hundred of dollars' worth of late fees."
Our CHOICE supporters are coming on board to fight the issue with us.
Muriel from Victoria says: "These are not 'discounts'. They are outrageous late fees that penalise a wide range of people very unfairly, particularly the elderly, the poor and the time-poor. They should be banned."
Sandra from NSW says, "Energy costs already place a high financial burden on families. These expensive sneaky late payment fees are unfair and unethical and should be illegal."
In our recent submission, we called on the government to make some key changes. We're calling for the regulator to:
- ban conditional discounts in the energy market
- ensure that any discounts offered to consumers are guaranteed
- prevent retailers from 'double dipping' and charging customers multiple late fees.
"We consider this a vital first step towards implementing effective regulation that protects Australians against this blatant profiteering," says Przhedetsky.
We can only do what we do with the help of our campaign supporters - if you're interested in finding out more about this issue, or others we are working on, please sign up with your email address below.
Stock images: Getty unless otherwise stated.