Electricity Customer ‘Loyalty Penalty’ Alive And Well In 2026

The Australian Competition and Consumer Commission (ACCC) has again warned that millions of Australian households aren’t on the cheapest electricity plan; many effectively being slugged with a “loyalty penalty” by their current retailer. And the financial hit is significant.

What’s The Impact Of  Electricity Loyalty Penalties?

A couple of days before Xmas, the ACCC urged households to change electricity plans to help offset the loss of Energy Bill Relief Fund rebates, an initiative that ceased at the end of last year. But regularly comparing electricity plans wouldn’t be on many Australians’ top 10 lists of things to do; particularly at that time of the year.

The call came after the ACCC’s latest Electricity Market Inquiry report revealed households on the same electricity plan for more than three years were paying on average $221 more annually than customers on new plans.

“Loyalty penalties are alive and well in the retail electricity market, so the very best thing people can do to save money is to switch plans – either moving to a cheaper plan offered by their existing retailer or changing retailers,” said ACCC Commissioner Anna Brakey. “Many households could effectively replicate the value of the recently ended government rebates by changing plans.”

The report indicates close to 2.5 million customers are paying prices at or above the default offer¹; with more than 400,000 paying more than 10 per cent over the default offer.

‘Better Bills’ Reforms Help Alert Consumers

While the number of Australian households paying too much for electricity remains very high, earlier ‘Better Bills’ reforms have had some positive impact on consumers. Although not perfect, these reforms required energy retailers to make bills clearer, simpler, and include prominent “better offer” messages.

Approximately 27 per cent of residential customers were on their retailer’s best plan at some point in 2024–25; up from 19 per cent between January and August 2024. There was also an increased proportion of customers on plans less than a year old, jumping from 29 per cent in August 2024 to 42 per cent in August 2025.

The following graph shows the proportion of customers receiving different types of ‘Better/ Best Offer’ messaging, all regions combined; for the periods 1 January 2024 to 13 August 2024, and 1 July 2024 to 30 June 2025.

The ACCC previously flagged the electricity retailer loyalty penalty issue in late 2024.

Further Electricity Bill Reforms In The Works

As mentioned, the Better Bills reforms weren’t perfect. For example, the requirement for more prominent “better offer” messages saw some retailers create plans with the same names, but different (and lower) pricing for new customers. The practice is the subject of a ‘super-complaint’ lodged by consumer group CHOICE that will get some serious attention.

There are also some new rules from the Australian Energy Market Commission (AEMC) coming into play from July 1 this year; designed to:

• Protect customers from paying higher prices for their loyalty by ensuring they don’t pay any more than the standing/default offer price if their energy plan’s benefits change or expire.
• Remove unreasonably high penalties for not paying bills on time.
• Restrict retailers from jacking up prices more than once every 12 months for market retail contracts.
• Prohibit retail fees for vulnerable consumers and limit fees and charges to reasonable costs for all other customers.

A later final determination concerning improving the ability to switch to a better offer will come into effect on 30 December 2026. And the AEMC also intends to undertake a pricing review that includes examining broader reforms to help consumers engage more effectively in the retail electricity market.

Something else related in the pipeline is a reformed default market offer (DMO) pricing mechanism, designed to get the ‘best deal’ for consumers while still acting as the maximum price retailers can charge for standing offers in DMO regions². The changes will be made as the current situation is not working out as intended according to Federal Minister for Climate Change and Energy Chris Bowen.