Consumer Engagement in Annual Energy Plan Renewal
Consumers regularly face the process of renewing annual energy plans. The energy market features a large number of plans from numerous retailers, which can present a challenge for individuals to thoroughly compare all available options. Despite the assistance offered by resources like the government’s Energy Made Easy Website, many consumers do not actively review their plans.
Potential Financial Implications
The practice of not actively comparing available energy plans can result in consumers accepting default plans. This passive approach may lead to customers incurring higher annual costs than if they had actively sought out and chosen more competitive plans.
Retailer Renewal Practices
Energy retailers typically initiate the renewal process approximately one month before a customer's current plan concludes. This often involves sending communication that includes a proposed new energy plan. For example, some retailers promote new plans as a specific percentage below the reference price.
The Australian Energy Regulator's Reference Price
Central to energy plan pricing is the reference price, which is established by the Australian Energy Regulator (AER). This reference price functions as a default safety net and represents the maximum price that an energy retailer is permitted to charge consumers.