New report finds sites help consumers switch energy plans, but compare few retailers and offers The chief energy policy adviser to state and federal governments of Australia has sounded the alarm over comparator websites offering consumers advice about their electricity plans, saying the sites lack transparency, and possibly inflate power prices.
The Australian Energy Market Commission’s annual review of the state of retail competition in the energy market says commercial comparator sites like iSelect, Compare the Market and Electricity Wizard are being used more frequently by consumers to chase discounts given power prices have been high, according to The Guardian.
It notes the comparator sites simplify the retailer and plan choice for consumers, and assist people in changing their plan or retailer, but the AEMC warns “the sites lack transparency in how many retailers and offers they compare”. “Some compare as few as four retailers. Consequently, they may recommend a plan that is not the best available in the market, given a customer’s circumstances. As the sites charge retailers for the channel-to-market service they provide, these costs are also likely to flow into retail prices”. The report released on Friday – which comes ahead of a separate review of electricity competition expected later this month from the Australian Competition and Consumer Commission – says consumers can make savings worth hundreds of dollars by switching the energy plans from the median standing offer to the cheapest market offer.
But while the benefits are there to be had, the AEMC chairman John Pierce says competition in the retail market “is currently not delivering the expected benefits to consumers” because retail offers, particularly discounting behaviour, are confusing for consumers. The report says the industry practice of marketing campaigns focused on percentage discounts off standing offers that are inconsistent between the various electricity and gas retailers makes it very difficult for consumers to compare offers. It notes that “a higher percentage discount does not always align to a cheaper customer outcome” and says consumers can be further bamboozled because discounts apply to different parts of the bill, with some only applying to usage and others to the whole bill.