The Australian Competition and Consumer Commission’s (ACCC) landmark inquiry into the electricity market reveals that Aussies who stay on the same electricity plan for more than three years pay $291 more than customers on newer plans from the same energy provider. This data is from the latest 2025 iteration of the report, first starting in 2018.
The 2025 ACCC inquiry goes even deeper, stating that 37 per cent of Australia’s population (that amounts to over 2 million Aussies) are still paying more than (or equal to) the default offer to keep the lights on. More than 400,000 of those customers are paying more than 10 per cent over the default offer.
For context, the default offer is a regulated price for electricity set by each state government — it also represents the maximum price a retailer is generally willing to charge.
Let’s put this into perspective. If you’re a customer on the Ausgrid network, the default offer in that network is estimated to cost $1,969 per year. In comparison, the cheapest plan on Canstar’s database costs roughly $1,521 — that’s a massive 23 per cent less than the default offer.
Customers who remain faithful to the same plan are practically being slapped with a loyalty tax. A loyalty tax, informally, represents the premium people pay for a service compared to the cheaper rates enjoyed by new customers. The ACCC Commissioner, Anna Brakey, says that the loyalty tax isn’t a new phenomenon.
Ms Brakey said that “Loyalty penalties are alive and well in the retail electricity market, so the very best thing people can do to save money… either moving to a cheaper plan offered by their existing retailer or changing retailers”.
“Many households could effectively replicate the value of the recently ended government rebates by changing plans.”
If switching to a newer and cheaper plan lightens the burden on household finances, why aren’t customers tripping over themselves to make the switch?
Forgetfulness
The simplest explanation is that Aussies simply ‘forget’. This can prove to be a costly mistake if their electricity plan has an expiry date.
If it has been more than twelve months since you last switched plans, the terms on your original plan may have expired. Your retailer will not hesitate to move you onto their default offer. As the years pass, you could be left paying hundreds more than you should.
However, this situation does not apply to all plans in the electricity market — providers such as AGL offer ongoing electricity plans, meaning they’re designed to run indefinitely without having to renew them.
If you’ve only recently switched to a new plan, its contract length can be found on its basic product information document (BPID). Once you’ve confirmed you’re on a plan with a set expiry, organise a calendar reminder to shop around for a replacement plan before it expires.
Alternatively, if it has been more than twelve months, it’s best to verify if you’re already on a default offer plan by:
- Check your email account for plan updates from your electricity retailer.
- Logging into your electricity retailer’s online portal or calling them.
Either way, if your previous electricity plan is close to or already expired, you can compare some of Australia’s cheapest and best electricity plans through Canstar’s database in mere minutes.
Misunderstanding
If you don’t pay close attention to your plan’s finer details, you may incorrectly assume that its rates are frozen in time. In reality, electricity plans can come with two different types of rate structures: fixed rates or variable rates.
A fixed rate plan, as its name implies, maintains the same electricity rates throughout the duration of the contract.
On the contrary, variable rate plans have rates that can change during the contract’s length, with the caveat that customers must be notified at least five working days in writing (e.g. email).
Regardless of which plan you find yourself on, you could be at risk of being moved onto a pricey default offer if your plan has a set expiry (e.g. twelve months).
Keep in mind that not all plans have an expiry date— always check your plan’s BPID to verify if you’re on an ongoing plan or a plan with a set contract length.
But if you find yourself being moved onto a default offer, expect to pay a whole lot more than you should. This is all the more reason to actively compare electricity plans.
Fear and confusion
The electricity market is a daunting place. From numerous tariffs to complex discount structures, there’s a steep learning curve to reap the savings your electricity plan brings to the table.
Unfortunately, this discourages customers from investing more time or effort into grasping the inner workings of the electricity market.
The Behavioural Economics Team of the Australian Government (BETA) also cites choice overload as a common culprit, where an overabundance of choice discourages, rather than encourages, active participation.
From 2023 to 2025, the number of electricity plans available in all states combined has risen from 130,000 to a whopping 145,500. It’s no wonder that Aussies find shopping for a plan a stressful ordeal!
By sticking to the original plan, customers are sticking to their comfort zone. As time progresses, their original plan will expire, and they’ll be unknowingly moved onto a default offer.
At Canstar, we liken ourselves to the bastion of energy comparison and choice. However, we do not expect you to transform into an ‘energy savings guru’ overnight. Navigating the energy market can be a tricky affair, but Canstar can help simplify your search for the plan that’s best for your situation.
Shave hundreds off your power bills
If you’re time-poor or are inexperienced with the intricacies of the electricity market, it can be daunting to navigate on your own.
Thankfully, there is a simple solution. By switching electricity plans on Canstar’s energy comparison platform, you can simply use each plan’s estimated annual cost to find a lower price.
Our journey takes the guesswork out of the switching process, giving you an immediate top-down view of some of the best plans on the market.
However, if the prospect of moving to a different provider intimidates you, why not start by switching to the cheapest electricity plan offered by your existing retailer? I managed to save hundreds by switching to my retailer’s best offer.
As per Better Bills Guideline, all providers must tell their customers how much they could save by switching to their ‘best’ offer. This information can be found on the first page of your latest energy bill, or the email copy of the bills is attached.
Switching internally is a straightforward affair — this can typically be done over the phone or your provider’s online portal (if applicable) in seconds. There’s no need for additional personal information — the switch is seamless and takes less than a few working days.
Let the initial ‘switch’ be the momentous step towards expanding your knowledge of the electricity market. You can click on the links below to learn more about the electricity market:
- How to Change Your Energy Provider
- Average Electricity Cost Per kWh in Australia
- How to Read My Electricity Bill
- Electricity Meter Types in Australia
It doesn’t pay to stay loyal
No good deed goes unpunished when it comes to swearing fealty to the same plan and provider. The ACCC’s market inquiry illustrates this trend very clearly.
With the Labour Government’s announcement that the 2025 energy rebates will not be rolling over into the new year, the time to switch is more important than ever.
All it takes is a simple switch to put more dollars back into your wallet.
