Be wary of energy plan comparison websites

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The Australian Consumer and Competition Commission (ACCC) recently fined iSelect $8.5m for misleading their customers from Nov 2016 to Dec 2018. iSelect falsely claimed it recommended the most suitable plan, based on comparing all plans offered by its retail partners.

Commercial comparison sites such as iSelect are paid a referral fee by a retailer for every new customer steered towards that retailer.

The ACCC said that “about 38% of people who compared electricity plans with iSelect at that time may have found a cheaper plan if they had shopped around or used the government’s comparison site”. 

Commercial arrangements that iSelect had with partner retailers restricted the number of plans those retailers could upload, so the plans iSelect recommended were not necessarily the most suitable or competitive.

The most reliable way to find the cheapest energy deal is to use the independent comparison site – Energy Made Easy www.energymadeeasy.gov.au run by the Australian Government. Recent upgrades to this site now allow you to enter details of recent usage by either providing your meter details, uploading a recent bill or entering data copied from your paper bill. This enables the site to provide you with an estimate of costs for each of the best energy plans for your particular household (assuming your future usage is similar to that of the billing period you provide).

The advice now incorporates income from the Feed in Tariff (FiT) applied to the energy exported from your solar PV panels. Note however that advice does not take account of the 44 cent additional FiT available for older PV systems installed before 30 Sept 2011 in South Australia.

Energy providers – Covid 19 response

The most important take-away message is this: make contact with your retailer. If you are struggling, make contact, explain your circumstances and make a request, whether it’s a debt waiver, payment extension or change to your payment plan.

The Australian Energy Regulator (AER) released last Friday a Statement of Expectations regarding energy retailers behaviour in the context of Covid-19. The Statement is pretty clear. The first point it makes is this: Energy is an essential service. The document outlines a number of expectations from government on protecting consumers who may be experiencing financial difficulties in this challenging time. Significantly, the Statement requests that retailers:

  • Freeze disconnection of customers until at least 31 July 2020
  • Be prepared to modify existing payment plans if a customer’s circumstances have changed
  • Offer customers who indicate they may be in financial stress a payment plan or hardship arrangement, regardless of whether the customer meets the ‘usual’ criteria for that assistance
  • Defer referrals of customers to debt collection agencies for recovery actions, or credit default listing until at least 31 July 2020.

Energy retailers have responded positively and, in many cases, have declared changes in response to Covid-19 that align to the AER’s Statement of Expectations. UCWB has put together key information from the big three retailers.

AGL

AGL has extended payment terms and will suspend disconnections for customers in financial stress until 31 July 2020.

Eligible customers may choose to apply for one of the following payment assistance options:

  • Option A: Deferring payments until 31 July 2020 without risk of disconnection
  • Option B: Sign up to a monthly instalment plan for payments to 31 July 2020.

On receiving an AGL bill, customers can fill in the form provided, ticking one of these options. See their website for details and contact pathways: AGL website – Covid 19 response

EnergyAustralia

EnergyAustralia will help customers in financial stress who reach out for help – tailoring payment plans, hardship plans (EnergyAssist), providing payment extensions and advice on energy usage.  The retailer will not disconnect residential customers in financial stress who have reached out for help. For details and contact pathways: EnergyAustralia website – Covid 19 response

Origin Energy

Origin has declared:

  • No disconnections for customers in financial stress until at least 31 July 2020
  • No default listing for any customer who is having trouble paying
  • Pause to all late payment fees effective immediately.

Origin Energy website – Covid 19 response

We have looked at the Covid-19 responses provided by several other retailers (Simply Energy, Lumo, Red Energy, Alinta, Powershop, etc) and they all make mention of changes and their preparedness to work with customers affected by Covid-19.

Minister calls for hardship measures from retailers

The Federal Energy Minister, Angus Taylor, has asked energy companies to apply their hardship provisions to people affected by the COVID-19 crisis.

The Minister assured the community that energy providers are putting in place plans to ensure that energy provision is maintained as the pandemic unfolds.

Good news is two retailers – Energy Australia and Origin – have so far announced they will not pursue disconnections during the Covid-19 pandemic. Let’s hope others follow suit…

Telco initiatives – response to Covid 19

Big 3 telecommunications providers have announced responses to the COVID-19 situation.

Telstra is providing home broadband customers with unlimited data until 30 April. Post-paid customers can apply for an extra 25GB of data, and some pre-paid customers can apply for an extra 10GB.

Eligible pensioners with a Telstra home phone can make unlimited calls until 30 April.

Telstra currently have restriction in their call centres, with fewer people available to handle customer enquiries, and have asked their customers to use their self-service tools where they can.

Optus has offered their postpaid mobile customers a one-off extra 20GB of data, and eligible prepaid customers will receive 10GB extra when they recharge with $40 or more during April. These offers need to be activated via the My Optus App.

Vodafone is giving their postpaid customers an additional 5GB of data, which will be added on 27 March. They also encourage customers to consider switching to “endless data” plans. Active prepaid customers will receive a one-off 3GB bonus with their next recharge. Additionally, postpaid and active prepaid customers will have unlimited standard national calls until the end of April.

Vodafone has also added state and federal health department websites to their “free-rating” list.

South Australia’s Virtual Power Plant Schemes

A Virtual Power Plant (VPP) consists of a network of solar+battery systems installed across the electricity system (in homes, for instance), which can be remotely controlled by the VPP operator to provide power from those systems to the grid, either when wholesale prices are high or when the grid frequency needs to be stabilised.

The VPP operator has knowledge of and access to these electricity markets that individual households don’t have, and can make money by providing electricity when it’s wanted, just as any other power plant can. The VPP operator typically shares this money with the owners of the solar+battery systems, to compensate the owners for the use of their power and the extra wear and tear on their batteries.

There are currently three VPP schemes on offer in South Australia – the SA Goverment’s Telsa/Housing SA VPP scheme, the AGL VPP scheme, and the Simply Energy VPP scheme. There are important differences.

AGL and Simply Energy:
The VPP schemes offered by AGL and Simply Energy are typical of VPPs in general. In each of these, the householder has to own their home. They have to invest in their solar+battery system – and they can use the State Government’s home battery subsidy scheme to help. The householder then gets free solar electricity from their roof, with excess stored in their battery for their use after dark. They also make some of the stored power available to the scheme operator, for a fee.

AGL’s current scheme offers an extra $1000 dollars upfront towards the battery for customers who stick with the scheme for 5 years. It then offers $100 sign up credit and 49.32 cents per day credit for VPP use of the battery (ie $100 once plus $180 per year), plus the feed-in tariff that applies under their contracts (14.2 c/kWh or 18 c/kWh).

The Simply Energy VPP pays $7 a day for use of the battery, up to a maximum of $5100 (which is just under 2 years’ worth) over a 3 year contract, plus a feed-in tariff of 15 c/kWh. They claim a Tesla Powerwall battery can be installed for $10,000 with the SA Government subsidy.

The disparity in payments to VPP customers is eye-catching! However, AGL’s tariffs for supply and usage are up to almost 15 c/day ($54/year) and 3.5 c/kWh cheaper than Simply Energy’s (though the $54 would be entirely wiped out by an annual $60 incentive payment for Simply RAA customers).

TESLA/Housing SA:
The Tesla/Housing SA scheme differs from the others in very important ways – it is in effect multiple schemes under one name. There have been 100 tenants in Phase 1, 1320 tenants in Phase 2, and further phases of the scheme are currently being rolled out.

For Housing SA tenants, the scheme is more a Power Purchase Agreement (PPA) than a Virtual Power Plant. Housing SA tenants with suitable roofs do not have to pay for a solar+battery system to be installed, but neither do they get free use of the system. Instead, Tesla retains ownership of the systems, and sells the electricity they make and store, either on the electricity markets, or to the householder (Housing SA tenant) who lives in the house where the system is installed. In this scheme, the tenant purchases all of the electricity they use, whether from the solar system, battery, or the grid. Because they do not own the solar system, they do not qualify to receive free solar energy or feed-in tariff payments. However, if they sign up to the VPP scheme, they qualify for very competitive rates through the scheme’s appointed retailer, Energy Locals, of 78.32 cents per day plus 31.13 cents/kWh. This rivals the SACEDO Origin Value prices (72.65 cents per day plus 32.19 c/kWh and 34.35 c/kWh over 10 kWh/day). They also get blackout protection via the battery (if it’s holding enough charge at the time of the blackout, which it might not be, as Tesla uses the battery to feed in to the electricity system).

Housing SA tenants have the right to opt out and choose another retailer, either before installation of the system, or afterwards, in which case the system will remain installed, but its output will bypass the household and go straight to the grid – the tenant will revert to buying all their electricity from the grid via their chosen retailer. There is already one story of a tenant opting in, then being wooed back by his previous retailer on the basis that “You should definitely be getting a feed-in tariff if you’ve got a solar system installed.” He will not; he does not own the system or its output.

A limited number of Housing SA tenants (320 for Phase 2) who’ve expressed interest in the scheme, but do not have suitable roofs, have been invited to buy their electricity from Energy Locals at the special VPP rates.

There are additional complexities to this VPP scheme. The first 100 participants (Phase 1) actually got a significant bonus – due to the experimental nature of the scheme, they DO get the full use of the solar+battery system as if they owned it. These systems will be rolled into the rest of the scheme when those tenants move out.

In the latest phase of the scheme, the Tesla VPP is now available to the public, with homeowners able to qualify for significant discount on the cost of the Powerwall battery if they sign up. This part of the scheme works more like the AGL and Simply Energy schemes, with customers investing in a battery and being rewarded for access to it by the VPP.

For Housing SA tenants there is not much apparent risk, and a price benefit that may beat the SACEDO Origin Value offer for energy concession recipients. For others, this scheme represents the cheapest way we’ve seen to get a Tesla Powerwall battery – but one commentator calculates that, even so, the battery is likely to be an economically sound purchase principally for vampires (inactive in daylight; using energy at night). Buyer beware.

Work continues on including community housing providers in the scheme – this hinges on preparing the kind of licence agreement needed to provide access to their roofs/walls for installation of systems owned by the scheme.

Competition in the mobile phone sector

In Australia, there are only three physical mobile phone networks (signalling towers, repeaters etc), owned by Telstra, Optus, and Vodafone. However, since the launch of Virgin Mobile in 2000, a growing list of Mobile Virtual Network Operators (MVNOs) has created a much more competitive market, by purchasing access to those networks and passing that on to customers at competitive prices.

Many MVNOs offer cheaper deals than the three network owners, but it’s best to look closely at the amount of data offered as this varies widely from 5 GB per month up to about 35 GB per month within the $20-30 per month price range. High data plans may only be of value if you have a need for them; and it is possible to find a modest-sized plan for an even lower price.

Another key element to look at is the billing cycle – these vary typically from 28 to 35 days. A 28 day month means you’ll make 13 payments in a year, whereas a 35 day month means only 11 payments are required. Some plans offer up to 365 days before expiry. Finally, initial or discount offers for new customers may offer significant discounts in the first 1-3 months but then revert to a much higher price. Unless you are very vigilant in changing your contracts regularly, these offers may result in higher costs once the initial discount runs out.

There is no government-backed comparison site for mobile phone providers, like there is for energy, though there are several commercial comparison sites. The WhistleOut site currently lists 29 providers, whereas Finder lists 50 providers of mobile phone plans. Both of these sites enable you to filter and compare a variety of mobile phone offers, but both may earn a commission for referring customers to providers.

Image source: ACCAN

Observations on the DMO

The Australian Energy Regulator, following a request from the Federal Minister for Energy, implemented a Default Market Offer (DMO) from 1 July 2019. These DMOs have replaced the retailer-determined standing offers previously available.

The Default Market Offer regime has been in place for 3 months now, allowing for a few observations:

•    The majority of electricity retailers have basic offers that work out within a dollar of the South Australian DMO Reference Price of $1941 for 4000 kWh used over a year (for a household without controlled load for hot water).
•    Most retailers also offer lower prices. Some work off base prices and talk about a percentage off the Reference Price (that is off both usage AND supply); others show lower base prices that may differ from offer to offer. All offers must now show a percentage comparison to the Reference Price for 4000 kWh/year.
•    Because the retailers do charge different daily supply and kWh tariffs, the price differences widen a little if a household’s usage is higher or lower than 4000 kWh per annum.
•    AGL offers up to 12% off the DMO price; Origin offers up to 15% off.
•    Several retailers are offering “bonus” or “sign up” credits”, such as “$100 credit on your first bill” or “$25 credit after 12 months”. Others offer sweeteners such as sports streaming or airline loyalty points. These inducements are not included in the DMO discount calculations.
•    In an attempt to outmanoeuvre the competition, a number of offers have been updated several times already.
•    Some small retailers (eg Powerclub, Powershop, Amber Electric) are trying a different sort of offer, which allows the customer to pay a fee for retail services and buy electricity on the variable wholesale market, rather than at set retail prices.

One more important observation: quoted prices must now include GST, when previously GST was added at the end of the bill, so when you look at post-1 July bills it may seem as though base prices have risen by 10%. Don’t panic – they haven’t! It’s just the GST.

SA Water Accessibility Initiative

SA Water has announced a scheme which aims to make essential water services more easily accessible to all South Australians, particularly those living with disability.

The scheme seeks to apply Universal Design Principles, which recognise that anyone can find themselves living with an impairment which makes it difficult to do what a fully fit and able person may be able to do. Universal Design aims to create products or processes that include as many people as possible in the first instance, and are also easily customisable to the needs of particular users.

The new scheme was inspired by the 2018 SACOSS Disability and Essential Services Conference, where presenters shared their dependence on and difficulty accessing essential services. SA Water then consulted more closely with some of those people and a number of other South Australians living with various disabilities. The program identified up to 15 potential initiatives or changes, with some already being implemented and others requiring investment over coming years.

Increased discount for Origin “Value” deal

Two years ago the SA Government invited electricity retailers to tender for the opportunity to offer a more attractive deal to consumers who receive the energy concession.

Origin Energy won the tender and from December 2017 introduced a discount offer that included an 18% discount on electricity usage and supply charges, and no extra fees and charges.  Origin committed to maintain this offer up to 30 June 2019. They also offered an 11% discount on natural gas usage and supply.

Following negotiations between the SA Government and Origin Energy to continue the discount offer beyond 30 June, the electricity discount has been increased from 18 to 20% for both usage and supply charges, effective from April. The gas discount remains at 11%.

Consumers already on the offer will have the higher discount automatically applied. While this discount offer does not have an end date, Origin may vary the electricity discount with 90 days’ notice.

About 50,000 South Australians have signed up for this Origin “Value” offer. Another 120,000 are eligible to sign up to this offer as they receive the SA Government energy concession payment.

Read the State Government website’s Concessions Energy Discount Offer page for more information, and phone Origin Energy on 1300 791 465 to apply for the Concessions Energy Discount Offer. It’s also necessary for the customer to transfer their energy concession to Origin – this can only be done after receipt of their first bill and new account number from Origin. Call the ConcessionsSA Hotline on 1800 307 758 to arrange the transfer – the concession for the first bill will be applied retrospectively and credited to the second bill.

See also our review of the implementation of SACEDO in BULB #15.