As of July 1 this year, a new set of reforms came into place that has affected electricity prices. The changes are designed to cut through the confusing marketing tactics used by energy companies and allow consumers to compare against a default price that’s been determined by government regulators.
But what does this mean exactly? Put simply, the regulations mean there is a change in the way the energy industry operates. According to Canstar Blue, customers who were on standing offers have moved on to cheaper tariffs, whilst the market offer tariffs will increase slightly in price.
To further understand what this all means, here’s a breakdown of the difference between a standing offer and a market offer.
A standing offer is also referred to as a standard contract. It’s a basic contract for electricity and gas where the terms and conditions have been set out by law.
A market contract is otherwise known as a market retail contract. This is a contract for electricity and gas that includes terms and conditions that are not included in standard contracts, such as discounts on rates. The tariff rates in these contracts are set out by the energy providers.
Who’s affected and what are the reforms?
In terms of electricity pricing, the changes affect New South Wales, Queensland, South Australia and Victoria.
In New South Wales, Queensland and South Australia, consumers who haven’t changed plans in a while and are currently on standard offers and will now be moved to a Default Market Offer (DMO).
The DMO is a reference price from which all plans are then compared. The DMO price will have to be shown as a percentage on energy provider plans so consumers can clearly see how their current plan compares. This reform acts as a safety net to ensure consumers are not paying more than they previously have.
In Victoria, it’s much the same as other states with the offer being called Victorian Default Offer (VDO). This, like the DMO, is a less expensive tariff, however, the VDO is designed to be a competitive offer, so customers can move to the VDO if it’s less expensive than the plan they are currently on.
For a better understanding of terms used in your electricity contracts, use the glossary on the Energy Made Easy website to cut through the jargon and ensure you are making an informed decision that you understand.
Whilst the government has put measures in to balance the cost of electricity prices, there is also another way to save on your energy plans. Find a plan that suits you through Compare Energy and Gas and you’ll also receive up to $112 cashback.
Switching providers and already have one in mind? Make sure to check Cashrewards before signing up to see if your choice is available. Choose from energy providers such as Energy Australia, Alinta Energy, Powershop, Tango Energy and others, and you’ll earn cashback when you switch.
Selecting the right electricity plan can be difficult. With the new electricity pricing reforms, consumers will be able to get a better understanding of how much they are paying and comparing plans will be made easier and clearer. Do your homework and check to see if your energy provider is listed on Cashrewards and you’ll earn yourself some cashback as well!