Beware energy plans chosen by your retailer: This trickery is filching hundreds of millions

Do you look forward to renewing your annual energy plan? Do you diligently sift through the hundreds of plans on offer by the 50 or so retailers? The government’s Energy Made Easy Website helps, but many of us are overwhelmed by the complexities or don’t make the effort, accepting whatever plan our retailer picks for us.

This is understandable, but the likely consequence is that you are being duped out of hundreds of dollars a year.

For instance, my retailer, Origin Energy, begins the renewal process with a chirpy email arriving a month before my current plan elapses, headed, “Your energy plan’s ending, so we’ve picked a new one for you”.

“Your energy plan’s ending, so we’ve picked a new one for you”.

This year’s pick, branded “Origin Easy”, is promoted as “2 per cent less than the reference price”. (The reference price is set by the Australian Energy Regulator (AER) as a default safety net and maximum price that a retailer can charge.)

The email mentions that I’m free to choose another plan, but doesn’t provide any details or give any hints that much cheaper plans are available. It also reassures me that I don’t need to do anything - “your new plan will start from the day after your current plan ends”.

Reprehensibly, the email does not reveal that the selected plan is Origin’s most expensive, nor that my current plan, which is 17 per cent below the reference price, could be simply rolled over. Surely an ethical retailer would have its customer’s interests at heart and inform them of all available options rather than picking the most expensive plan.

This inexcusable ruse has been repeated for each of the past five years (silly me for being a loyal customer).

Every year I complain, and am then guided to the cheapest plan, typically saving around 15 per cent compared with the plan picked for me. I duly protest the deceptiveness of this practice and request that it not be repeated.

But nothing changes.

This year, when I asked for an explanation Origin’s response was the same as before, “The reason we transfer accounts to the Origin Easy or Origin Basic plan by default is that these are the default plans set by the energy regulator. This is standard practice across the industry to ensure customers always have an energy plan in place without interruption”.

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The “reason” is clearly specious.

If a customer does not choose a plan, they are charged the default reference price anyway – and their energy supply is never interrupted. Also, I found that while Origin’s ruse is applied by some retailers, it is not “standard practice across the industry″⁣.

The consequences of this and other deceptive marketing practices can be gleaned from a recent report by the Australian Competition & Consumer Commission into energy market competition.

The report found that 73 per cent of the seven million residential electricity customers in South-East Queensland, NSW, Victoria and South Australia are not on their retailer’s cheapest plan. The estimated average cost for each affected customer is $291 a year (for small business customers the average cost is $554 a year.)

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While the default ruse is not solely responsible for a collective cost of $1.5 billion for those five million Australian households, it would constitute a significant portion, likely amounting to hundreds of millions of dollars a year.

And what I find particularly galling is that whoever your retailer is or whichever plan you are on makes no difference to the quality or reliability of your energy supply. Retailers do no more than collect payments from consumers to pass on to the electricity and gas companies that produce and transport the electrons and gas molecules to our homes and businesses (extracting their costs and profits in the process).

I was so incensed by yet another repeat of this ruse by my (about-to-be former) retailer that I have alerted the ACCC, the AER and the NSW Energy & Water Ombudsman. This deceptive practice should be banned, if not illegal in the first place, and all retailers should be compelled to act transparently and honestly in the best interests of their customers, as some do.

A final word of advice – never accept the plan your energy retailer suggests. Always check out other plans and other retailers. You could save yourself hundreds of dollars every year, as I am about to do (again).

Ted Woodley is a former managing director of PowerNet, GasNet, EnergyAustralia and China Light & Power Systems (Hong Kong)

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