Victorian Energy Market report 2018-19

Retailers can make a range of energy offers available to Victorian residential and small business customers. We reviewed the range of energy offers published by retailers on 30 June 2019. We grouped our analysis as follows:

• standard contract offers
• no discount market offers, and 
• conditional market offers with discounts offered – highlighting what you could pay with, and without, the discount being applied.

Figure 4.16 over the next page shows that on 30 June 2019, no discount residential offers were $7 to $70 lower than the lowest conditionally discounted offer. 

For small business, no discount offers ranged from $10 to $361 lower than the lowest conditionally discounted offer (as shown in figure 4.17).

New rules that keep customers informed about best offers and changes that impact bills

We have introduced a set of new rules that apply from 1 July 2019 that focus on building trust through new customer entitlements in the retail energy market.

'Best offer' information for energy consumers. Retailers must tell customers on their bill whether they're on the best energy plan and how much the customer could save by switching, at least quarterly for electricity bills and at least every four months for gas.

Prior warning of bill changes. Retailers are required to notify a customer at least five days prior to price or benefit change that will affect the customer's bill. When they do this, energy retailers must include a 'best offer' message telling customers whether a cheaper plan is available, and how much the customer could save by switching.

Clear advice before you sign a new energy deal. Retailers must help customers navigate to a product that best suits their circumstances.

Standardised energy fact sheets to help customers compare plan information. Retailers are required to provide customers with energy fact sheets that include a comparison tool that helps to easily compare plans based on the average yearly cost for a range of typical customers. This fact sheet will be available to customers at critical points in their decision-making process.

_{Annualised bill based on a typical residential customer usage of 4,000kWh per year}

 _{Annualised bill based on a typical small business customer usage of 12,000kWh per year}

Comparing the range of electricity offers available in the market

We compared the range of available electricity offers for residential and small business customers, published by retailers on 30 June 2019. As an example, we looked at the offers available in north-west metropolitan Melbourne (refer to figure 1.2). 

In that region, the yearly amount a typical residential customer could pay for electricity ranged from $1,082 to $2,158, depending on the retailer market contract, and if conditional discounts were met.

The retailers with the lowest residential electricity market offers were Powerclub, GloBird Energy, and Elysian Energy ranging from $1,082 to $1,157 (as shown in figure 4.18). However, if the conditions of discounts were not met, People Energy, CovaU, and GloBird Energy had the highest market offers with costs ranging from $1,986 to $2,158 (as shown in figure 4.20). The potential yearly cost of not meeting the conditions for discounts ranged widely between retailers but could be as much as $507 to $556 for 1st Energy, Powerdirect and GloBird Energy. This is a significant reduction from the yearly cost of not meeting the conditions for discounts in 2017–18, which reached up to $767.

For small business, the range of market offers was estimated to be between $3,051 and $6,152 depending on the retailer market contract, and if conditional discounts were met. The retailers with the lowest electricity market offers were Powerclub, Powerdirect and AGL ranging from $3,051 to $3,273 (as shown in figure 4.19). If the conditional discounts were not met, Simply and CovaU had the highest market offers, with costs of $5,980 and $6,152 respectively. 

The potential yearly cost for small businesses if they did not meet conditional discounts also ranged widely between retailers but could be as much as $1,892 and $1,928 for Sumo and Simply Energy, respectively. 

A comparison of residential and small business electricity offers in all distribution areas of Victoria is found in the Energy retail products and prices appendix to this report.

Figure 4.18 Range of all published electricity offers available by a retailer (flat and multi-flat offers only), for a residential customer, in the Jemena distribution area

_{This figure shows the price range of all the market offers from a retailer (the pink bars) whether the offers are no discount or have discounts that are met or not met. The blue bar shows the highest standard contract on offer from a retailer. Note: Powerclub had no available standing offer as at 30 June 2019.}

Figure 4.19 Range of all published electricity offers available by a retailer (flat and multi-flat offers only), for a small business customer, in the Jemena distribution area 

_{This figure shows the price range of all the market offers from a retailer (the pink bars) whether the offers are unconditional or have discounts that are met or not met. The blue bar shows the highest standard contract on offer from a retailer. Note: Powerclub had no available standing offer as at 30 June 2019.}

Figure 4.20 Range of all published discounted electricity market offers available (flat and multi-flat), for a residential customer, in the Jemena distribution area

_{This figure shows the price range of only the discounted market offers from a retailer. Retailers who do not offer any discounted market offers are not shown in this figure. The blue bars show the price range of offers when discount conditions are met, and the orange bars show price ranges if discount conditions are not met.}

Figure 4.21 Range of all published discounted electricity market offers available (flat and multi-flat), for a small business customer, in the Jemena distribution area

This figure shows the price range of only the discounted market offers from a retailer. Retailers who do not offer any discounted market offers are not shown in this figure. The blue bars show the price range of offers when discount conditions are met, and the orange bars show price ranges if discount conditions are not met.

Comparing the range of gas offers available in the market

We compared the range of available gas offers for residential and small business customers, published by retailers on 30 June 2019. As an example, we compared the offers available in the central area of Australian Gas Networks’ gas distribution area (see figures 4.22 and 4.23). 

We estimate that the yearly amount a typical residential customer could pay for gas ranged from $1,180 to $2,117, depending on a retailer’s market offer, and whether conditional discounts were met. 

The retailers with the lowest residential gas market offers were Origin, AGL and GloBird Energy, ranging from $1,180 to $1,249 (as shown in figure 4.22). However, if the conditions of discounts were not met, the retailers with the highest residential market offers were Globird Energy and Click Energy at $1,922 and $2,117, respectively (as shown in figure 4.24). 

The potential yearly cost of not meeting the conditions for of your discount, if you are a typical residential customer, could be as much as $550 and $634 for retailers such as Click Energy and Globird Energy respectively (as shown in figure 4.24).

The cost range for small business was estimated to be between $8,452 and $37,593 depending on a retailer’s market offer (and whether conditional discounts were met), as shown in figure 4.25.

The retailers with the lowest gas market offers were AGL, Lumo and Powershop, ranging from $8,452 to $9,152 (see figure 4.23).  However, if the conditions of discounts were not met, the retailer with the highest market offer was Simply Energy at $37,593 (as shown in figure 4.25). The potential yearly cost of not meeting the conditions for your discount, if you are a typical small business customer, could be as much as $11,165, for example, if you were with Simply Energy (see figure 4.25).

We note that some gas offers were priced very high in the market by some retailers. A comparison of residential and small business gas offers in all distribution areas of Victoria is found in the Energy retail products and prices appendix in this report. This could also be read in context of the performance of retailer market share and other indicators in our Performance of energy businesses appendix in this report.

Figure 4.22 Range of all published gas offers available from all retailers, for a residential customer, in the Australian Gas Networks – Central distribution area

_{This figure shows the price range of all the market offers from a retailer (the pink bars) whether the offers are unconditional or have discounts that are met or not met. The blue bar shows the highest standard contract on offer from a retailer. This figure assumes the yearly gas consumption of a residential customer is 54.4 GJ. Offers are based on those available on 30 June 2019. Figures include GST.}

 Figure 4.23 Range of all published gas offers available from all retailers, for a small business customer, in the Australian Gas Networks – central distribution area

_{This figure shows the price range of all the market offers from a retailer (the pink bars) whether the offers are unconditional or have discounts that are met or not met. The blue bar shows the highest standard contract on offer from a retailer. This figure assumes the yearly electricity consumption of a residential customer is 500 GJ. Offers are based on those available on 30 June 2019. Figures include GST.}

Figure 4.24 Range of all published discounted gas market offers available from all retailers, for a residential customer, in the Australian Gas Networks – central distribution area

_{Figure shows the price range of only the discounted market offers from a retailer. Retailers who do not offer any discounted market offers are not shown. Blue bars show the price range of offers when discount conditions are met; orange bars show price ranges if discount conditions are not met. Figure assumes the yearly electricity consumption of a residential customer is 54.4 GJ. Offers are based on those available on 30 June 2019. Figures include GST.}

Figure 4.25 Range of all published discounted gas market offers available from all retailers, for a small business customer, in the Australian Gas Networks – Central distribution area

_{Figure shows the price range of only the discounted market offers from a retailer. Retailers who do not offer any discounted market offers are not shown in this figure. Blue bars show the price range of offers when discount conditions are met; orange bars show price ranges if discount conditions are not met. Figure assumes the yearly electricity consumption of a residential customer is 500 GJ. Offers are based on those available on 30 June 2019. Figures include GST.}