Victorians are loyal to the big utilities even though they sometimes have cheaper deals elsewhere, a new industry report shows.
The Essential Services Commission (ESC) noted that there is a “noticeable consumer preference for large retailers” from brands like AGL, EnergyAustralia and Origin.
While price still has the biggest impact on consumers when switching electricity provider, other factors seem to be just as important, according to ESC Chair Kate Symons.
“It’s important that all energy retailers compete on what customers tell us – price.
The ESC report highlighted that large retailers weren’t always focusing on price, but rather improving the brand’s services, which has helped retain customers.
In fact, large electricity brands with a larger market share had much higher customer retention rates than small and medium-sized retailers.
This is despite a number of these small and medium-sized competitors who consistently offer lower energy prices across Victoria.
Energy customers tend to stick with larger retailers even if they could find a better deal elsewhere, our report on the Victorian Energy Market shows: https://t.co/lokQFK3jBs pic.twitter.com/zyD7PKxfc5
– Essential Services Commission (@EssentialVic) November 30, 2021
While price is central to good business, other incentives and services shouldn’t be overlooked, said Mark Brownfield, chief customer officer of EnergyAustralia.
“Customers tell us that price is important, but they are also looking for a dealer they can trust, who will support them in difficult times and offer options to reduce their energy consumption, CO2 emissions and save money,” he said .
“We also pride ourselves on how easy it is for customers to get in touch, whether by talking to our contact center team members or using self-service options.”
Brownfield said a wide range of services can help Australians get more out of their electricity company.
“Often times, customers want to speak to us to make sure the power is on when they move, or they need help understanding their bill. In any case, we are at your side with words and deeds and pride ourselves on being reliable.
“We also work directly with customers when it becomes difficult to control their energy costs. Payment plans and renewals are examples, in addition to assisting with energy audits or access to concessions and government grants that they may not be aware of. “
Cheap electricity and gas offers in Victoria
Below are some of the cheapest electricity and gas deals in Melbourne currently available in our database. Please use our free comparison tool to see prices in your area.
Here are some of the cheapest published offers from retailers in our database, with a link to the retailer’s website for more details. These are products from referral partners †. These costs are based on the Citipower Melbourne network, but prices may vary based on your circumstances. This comparison assumes a general energy consumption of 4000 kWh / year for a private customer at a uniform tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all offers in your area. As always, check all the details of any plan directly with the dealer before making a purchase decision.
Here are some of the cheapest gas deals in our database for VIC. These estimated annual costs are based on the Australian gas network in Melbourne and an annual gas consumption of 29,830 MJ, but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest estimated cost. This table contains referral partner products †. Our database may not cover all offers in your area. Please visit the dealer websites for the latest information.
Does size matter when it comes to energy?
There is no one-size-fits-all scenario in the Australian retail energy market, so finding the best value for money always depends on a customer’s individual needs.
John Ballenger, Tango Energy’s executive manager of growth and strategy, said the industry has moved on and more Aussies are willing to give the smaller folks a try in their search for better deals.
“The market has changed a lot in the last five years,” he said. “At the top three retailers, a million Australians have actually moved, while the market share of the closest retailers has doubled over the same period – proof that people are increasingly realizing the value of the move.”
Mr Ballenger claimed that smaller retailers in Australia had an advantage over the large established energy companies.
“People understand more and more that their energy is supplied the same way regardless of the dealer, but the smaller providers are much more agile, much more customer-oriented and offer new innovative products and services at much lower costs.”
According to the ESC report, Tango Energy is a medium-sized electricity trader with a current market share of between one and five percent. The median prices between each retailer group are shown below.
Source: Essential Services Commission, Victorian Energy Market Report 2020-21.
What is the difference between large, medium, and small retailers?
Large energy retailers are companies that hold more than five percent of the market share. For example, the following providers are all considered major power traders in Victoria:
- Energy Australia
- Light energy
- Original energy
- Red energy
- Simply energy
Meanwhile, medium-sized retailers are brands that hold between one and five percent of the market share. In Victoria these companies are:
- Alinta energy
- GloBird energy
- Impulse energy
- Current direct
- Tango energy
All other retailers not classified as medium or large with a market share of less than one percent are considered to be small energy retailers.
Why are Victorians loyal to major utility companies?
The ESC report stated that consumers may have some perception of the energy market, which could explain their loyalty to the bigger brands. Some of the possible explanations were:
- Choosing a smaller retailer can have an impact on their power supply, although utility risks are usually associated with power distributors rather than retailers.
- Better customer service or better experience from large retailers.
- Availability of bundling of household services such as electricity with gas or the Internet.
- Greater brand awareness of large or prominent retailers.
Even if Victorians choose to stick with their utility company for long periods of time, don’t expect any reward, explained Canstar Blue Energy Editor Jared Mullane.
“You often get the impression that loyalty is rewarded, but that is certainly not the case today,” said Mullane. “If you’ve worked for the same provider for several years, you probably pay a so-called laziness tax.
“In the face of fierce competition in the Victorian energy market, don’t be afraid to compare providers on the basis of price, but also on other characteristics that are important to your needs. Fortunately, Canstar Blue reviews electricity and gas providers as rated by Australian billpayers every year for factors such as bill clarity, customer service, ease of registration and environmental sustainability.
Compare electricity providers in Victoria
Photo credit: ImageFlow / Shutterstock.com, Duncan Andison / Shutterstock.com