The real deal with the default market offer

1st October, 2019

New reports by the ACCC and AER show electricity pricing regulations have reigned in confusing discounts and made advertising more transparent. But many customers with Tier 1 retailers stand to save hundreds of dollars more per year by shopping around with competitive smaller retailers.

In July 2019, the Australian Energy Regulator (AER) introduced the Default Market Offer (DMO) to act as a price cap on what energy retailers can charge customers on standing offers. This new regulation directly affected the almost 800,000 electricity customers who remain on standing offers in QLD, NSW, and VIC.

But what about everyone else?

The rest of electricity customers, on more competitively priced market offers, will notice changes mostly to the way retailers advertise their prices. In the past, retailers could offer ‘discounts’ against their own arbitrarily priced standing offers. But with the new regulations, all advertised prices must now be compared to the DMO ‘reference price.’ This means consumers have an easy and fair way to compare offers across the market.

Has it worked?

Initial analysis by the Australian Energy Regulator (AER) since the DMO regulations have come into effect show that Tier 1 retailers are moving away from conditional discounts. This could be for a variety of reasons, including reluctance to advertise how their discounted rates compare to the DMO reference price. It’s no surprise really, considering that many of those offers never stacked up to begin with.

The ACCC found many customers still aren't getting the best deal possible

But despite confusing discounts quickly becoming a thing of the past, the ACCC found that many customers still weren’t getting the best deal possible. Nearly 70% of customers are on residential market offers with Tier 1 retailers, and the ACCC found that these customers could see savings of hundreds of dollars more per year. How you might ask? Simply by shopping around for a better offer from competitive smaller retailers.

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