The Australian competition and consumer Commission will investigate whether energy retailers are misleading customers by promoting plans that promise savings or value but in practice offer poor value, after consumer group CHOICE lodged a designated complaint.
The complaint, submitted in May, is the first designated complaint received by the ACCC from CHOICE and the second under a new designated-complaints framework that came into effect on 1 May 2024. The ACCC said it is satisfied the complaint raises a significant or systemic market issue affecting consumers.
“Energy plans that promote ‘savings’ or value may entice many consumers to a particular plan and influence their decision making,” ACCC Deputy Chair Catriona Lowe said.
CHOICE’s complaint highlights two areas of concern: retailers re-using identical plan names for products with different rates, which can confuse customers, and situations where retailers prompt consumers to switch to plans they are not eligible for. These problems are said to be especially acute where “Better Offer” and “Best Offer” messages — required to appear on residential energy bills to alert customers if they could save by switching — refer to plans that no longer exist in the same form or that a customer cannot obtain.
“We are concerned that consumers may be misled or deceived by plan names or descriptions of plans that offer ‘savings’ that are not genuine, or that consumers may be discouraged from switching to cheaper plans that are available to them,” Ms Lowe said. “It is essential that energy retailers provide clear and accurate information about their energy plans so that consumers can make informed decisions when choosing an energy provider and plan.”
The ACCC said it may take enforcement action under the Australian Consumer Law if its probe finds conduct that contravenes the law, and that it could also prepare industry guidance or contribute to policy or law reform initiatives.
The Australian Energy Regulator has already moved to address part of the problem, requiring retailers that re-use plan names to include additional information beneath certain Better Offer messages to reduce customer confusion when newer, differently priced versions of plans carry identical names.
The ACCC will continue to engage with the AER and the Victorian Essential Services Commission as those regulators undertake reviews and potential law reform, and has flagged that some issues raised by CHOICE may be most effectively dealt with through those processes.
“The issues raised by CHOICE exacerbate the challenges and confusion that consumers may face when navigating the often complex energy market,” Ms Lowe said. “The upcoming reviews by the Australian Energy Regulatory and Victorian Essential Services will provide the opportunity to consider some of the issues raised by CHOICE while reflecting on the broader issues facing consumers in the energy market.”
Ms Lowe also acknowledged CHOICE’s role in the ACCC’s consumer engagement. “We thank CHOICE for the work that has gone into submitting this designated complaint. CHOICE is an important member of the ACCC’s Consumer Consultative Committee and we value its insights as a leading consumer advocate group. The designated complaints framework is one of several avenues for highlighting important issues that cause consumer harm,” she said.
The ACCC’s formal response to CHOICE’s complaint is available on its website.
