The Electricity Retail Code (the Code) sets a cap on standing offer prices and specifies how prices and discounts must be advertised, published or offered to consumers.
Under the Code, consumers benefit from:
- a ‘reference price’ benchmark set by the government to help you compare plans
- price caps to help keep prices down.
The reference price and price caps apply in New South Wales, south-east Queensland and South Australia.
Similar rules apply in Victoria under the Victorian Default Offer.
For consumers in other areas, some prices are set by government. For more information, contact your state or territory regulator.
There are two types of electricity plans that your provider may offer you:
- a standing offer, or
- a market offer.
A standing offer is a plan where prices are set by the retailer no more than once every 6 months. All retailers must provide at least one standing offer and they must contain some standard terms and conditions.
Standing offer prices in New South Wales, south-east Queensland and South Australia must not be more than the price cap set by the Australian Energy Regulator (AER).
You might be on a standing offer if:
- your market offer expires and you haven't chosen a new one — your provider can move you to the standing offer
- you haven’t changed energy retailers since the market was deregulated
- you’ve moved properties and used a moving services company to sort out your connections — you may have been signed up to a standing offer.
A standing offer may be the best option for some peoples’ circumstances, although this is uncommon.
A market offer is a plan that usually includes prices or special discounts for a set period. Prices are usually more competitive than standing offers.
Unlike standing offers, the prices of market offers can be changed at short notice.
The price cap does not apply to market offers.
A great way to save money on your electricity bill is to shop around. You may not be on the cheapest offer available, so it’s worth checking your offer against what else is available.
To get a better plan, use the three Rs:
- Reference price – check the government reference price for a quick comparison when you are shopping around on a retailer’s website.
- Review – review your plan on government comparator sites such as Energy Made Easy or Victorian Energy Compare. You can upload your bill on these comparator sites to help find a better deal. Checking three offers is a good place to start.
- Rates – compare the rates of other offers with your current offer rates. To find your rates, check your bill.
Consumers in New South Wales, south-east Queensland and South Australia should use the government reference price when comparing offers.
Consumers in New South Wales, Queensland, South Australia, Tasmania and the Australian Capital Territory can also speak directly to their retailer or use Energy Made Easy to find a better deal.
The reference price is a benchmark price set by the government. The reference price makes it easier for you to compare the prices of different electricity plans from different energy retailers.
Why the reference price was introduced
In 2019 the Australian Government introduced the Code, which sets out the new advertising practices and the requirement for prices to be compared to a common reference price to make it easier for consumers to compare electricity prices. It also introduced the price cap, which is the maximum price for electricity services based on an annual calculation for typical users.
Before the Code, discounts on electricity offers were off different base rates, making it very difficult for consumers to know which deal was best.
The Code implements recommendations made in the ACCC’s Retail Electricity Pricing Inquiry.
Understanding the reference price
The reference price is what a representative customer would pay over a year, based on a set model annual usage and the maximum prices set by the AER. The reference price is a benchmark price for energy retailers to compare their offers to.
Although the reference price may not indicate your actual annual cost for electricity, the reference price is useful for comparing different offers between different energy retailers.
The reference price will also differ depending on your tariff type (that is, how your electricity plan is structured). Tariff structures are the basis for calculating your bill and there are many different tariff structures available. Tariffs are explained on the AER website.
Remember the three Rs: reference price
Using the reference price helps you compare ‘apples with apples’ when comparing plans.
A bigger percentage off the reference price usually means a cheaper plan, based on average electricity usage.
Different regions have different reference prices because energy usage and costs vary across these regions.
Electricity retailers must tell customers how their electricity offers compare to the reference price. A percentage figure shows you how the plan compares to the reference price.
|PLAN A||PLAN B|
|8% less than the reference price||3% less than the reference price|
In this case, Plan A is cheaper than Plan B. Check this percentage comparison across different retailers’ offers to get a quick like for like comparison.
If there are any conditional discounts on an electricity plan, such as a pay-on-time discount, retailers must compare them to the reference price.
A conditional discount is offered on the basis that you fulfil that condition of your plan. ‘Pay on time’ or ‘pay by direct debit’ are examples of common conditional discounts.
You can also compare conditional discounts across offers.
|PLAN C||PLAN D|
|10% less than the reference price||10% less than the reference price|
|plus a further 5% below the reference price if you always pay on time||plus a further 1% below the reference price if you always pay on time|
In this case, Plan C is cheaper than Plan D if you always pay on time.
Using the reference price and percentage figure is a way to compare offers and not necessarily the exact price you will pay on your energy bill. This is because the reference price is based on the energy use of a representative customer.
A representative customer is someone who has typical energy use in the region of the offer. The price you actually pay may differ from the representative customer. If you take up the offer, you may pay more or less than a representative customer depending on how much energy you use and when.
Finding the reference price on an electricity plan
Retailers in New South Wales, south-east Queensland and South Australia must show how their prices compare to the reference price when they advertise their electricity plans. They must also provide the comparison when they notify a customer of a change in prices for their contract.
The following is an example of an advertisement for an electricity plan that you may find on a retailer’s website.
Energy Us Saver
Lowest possible price including GST for an average household using 3900kWh/yearly on a flat rate tariff in the Ausgrid network
In this example:
- the reference price is set by the government at $1000 per year for the representative customer on a flat rate tariff in the Ausgrid network region. You may not see the actual reference price in dollars, but you will see how the electricity offer compares to the reference price as a percentage
- Energy Us, the electricity retailer, states that this offer is 15% off the reference price ($1000). This means the representative customer who takes up this offer would pay $850 per year
- your annual cost on this plan may differ from this estimated annual cost based on your individual usage, meter type and distributor.
Lowest possible price
Electricity retailers provide an estimate of the lowest amount a representative customer would pay for the year. This is called the lowest possible price. You can use this as a guide and to further compare plans. What you pay will depend on your actual usage during the year and assuming that any conditions on all conditional discounts are met.
The lowest possible price is different to the reference price. The lowest possible price is set by the electricity retailer and is the cost of the plan including any discounts offered on the plan, whereas the reference price is a benchmark price set by the government.
You may see the lowest possible price referred to as the ‘estimated annual cost’ or ‘lowest annual price’ on advertisements.
This example of an advertisement shows 11% less than the reference price, plus a further 3% below the reference price as a pay-on-time discount. If you always met the conditions by paying on time, the price would be 14% less than the reference price.
Do’s and don’ts of using the reference price to compare electricity offers
|Do compare the percentage figure across offers in the market – it’s a quick and easy way to compare offers.||Don’t read the percentage figure as exact the discount you will receive – your bill will differ depending on your usage.|
|Do compare percentage figures of conditional discounts across offers.||Don’t read the comparison percentage figure of a conditional discount as the exact discount you will receive – your bill will differ depending on your usage.|
|Do compare the lowest possible price across offers – it’s quick and easy to compare offers in the market.||Don’t read the lowest possible price as the price you will receive under the offer – your bill will differ depending on your usage|
Remember the three Rs: review
Use comparison tools to review your plan. Aim to review your energy plan once per year and check at least three offers.
To calculate the best offer for you, upload your bill when searching for offers on Energy Made Easy.
You can check with your retailer whether your plan is a standing offer or market offer. In general, standing offers are more expensive than market offers. Switching to a market offer could help save you money.
Key questions to ask your retailer
Not sure how to start a conversation with your retailer about your electricity plan? Use our script of key questions to help get the best deal from your current retailer.
- Am I on a market offer or a standing offer?
If you’re on a standing offer, ask about the best market offer.
- How does my current plan compare with the reference price?
A higher percentage off the reference price will usually be a better deal for an average consumer.
- What’s your best available offer at the moment?
Don’t forget to ask how long an offer lasts. Try to lock in any savings by asking for the discount to be ongoing.
- Are there conditional discounts on any of your offers? Can I save more by paying on time or setting up a direct debit?
You might save more by paying on time or setting up a direct debit.
There are some myths about the Code and what it actually means for your offer. Here are some facts about what retailers can and can’t do under the Code.
|Retailers must offer market offers equal to the reference price.||Retailers can offer market offers above or below the reference price.|
|Retailers can’t offer conditional discounts.||Retailers can offer conditional discounts, but they must be compared to the reference price.|
|Retailers can lead their advertisements with conditional discounts.||Retailers conditional discounts must not be the most prominent part of the advertisement.|
|Retailers can set their standing offer rates at any price.||Standing offers must be equal to or less than the price cap.|
Remember the three Rs: rates
You can compare your current rates to other electricity plans. One of the best ways to do this is to use your energy bill.
Make sure to check your retailer's website, as they may also have helpful information on how to read energy bills.
Electricity service providers in New South Wales, South Australia and south-east Queensland are required to advertise their offered prices by showing how they compare to the reference price.
Electricity retailers do not have to communicate the reference price, lowest possible price, or discount on customers’ bills or in general brand advertising.
The following image is an example of general brand advertising, so it doesn't need to show the reference price.
If you can’t resolve a problem by speaking to your retailer, put your complaint in writing. This way the company is clearly aware of the problem and what you want, and you have a record of the contact.
If you are unable to resolve your dispute, you can report a consumer issue or contact the Energy and Water Ombudsman of your relevant state or territory. You can find the contact details for your Energy and Water Ombudsman on the Energy Made Easy website.