Staying with the same electricity retailer for years can actually cost you more. The ACCC calls this the loyalty penalty. Millions of households still face this issue, and often the easiest way to save is by switching plans.
In this article, you’ll learn what the loyalty penalty means in plain English. This article also explains why it happens and shows you how to avoid it in NSW. We’ll stick to electricity plans only and keep solar and batteries out of it.
Even though solar and solar batteries help relieve (if not eliminate) this problem.
What Is a Loyalty Penalty According to the ACCC?
A loyalty penalty means you pay a higher price because you stay on an old electricity plan.
Retailers often change plans and launch new ones with sharper prices to attract new customers. Long-term customers often sit on older plans with worse rates and higher daily charges.
Discounts can also expire. Some plans start with a discount that ends at a later date. The bill increases, and many people miss it.
The ACCC says you can beat this problem by switching. You can switch to a cheaper plan with your current retailer or switch energy retailers.
How Much Does the Loyalty Penalty Cost?
The ACCC put a number on the pain.
Households that stayed on the same electricity plan for more than three years paid $221 more per year on average than customers on new plans.
That number sounds small until you stack it.
- You can waste $221 in one year.
- You can waste $1,105 in five years.
- You can waste $2,210 in ten years.
The ACCC also showed how many people sit in the danger zone.
Close to 2.5 million customers paid prices at or above the default offer, and more than 400,000 paid more than 10% above it.
The ACCC also tracked price movement across regions.
Annual electricity prices for residential customers rose by about 6% from 2024 to 2025 for plans without controlled load, and NSW saw the largest yearly increase at about 9%.
Higher prices make plan choice matter more. A bad plan hurts more when the whole market climbs.
What is a Default Market Offer (DMO) in NSW ?
NSW uses the Default Market Offer (DMO).
The DMO acts as a regulated safety net price for standing offers in NSW. It also acts as a benchmark price. Retailers and comparison tools often use it as a reference point.
Think of the DMO as a ceiling for the basic safety net plan. You still want a good market offer most of the time, and you still want to compare the whole bill, not one headline number.
Why Loyal Customers Pay More
Retailers compete hard for new customers, often pricing new offers at lower rates to win market share. They also refresh plan features and plan discounts. That’s where it gets sticky.
Most people do not review their electricity plan often. Life is busy, and most folks are focused on rent or a mortgage, food, school, and work. The electricity plan sits in the background until the bill spikes.
Some bills are also confusing. The market uses too many plan names and too many discount structures, and that complexity helps retailers keep people on higher-priced plans.
The ACCC delivered a clear message: switching plans often delivers the best savings.
Better Bills Reforms Helped, and They Still Leave Gaps
Regulators pushed changes called Better Bills reforms.
These reforms forced retailers to make bills clearer. The reforms also pushed retailers to show prominent messages advertising cheaper plans on bills.
The ACCC reported improvement.
The ACCC said 26.7% of residential customers sat on their retailer’s best offer at some point in 2024–25. The earlier figure sat at 19.3% in 2024. The ACCC also said the share of customers on plans less than one year old rose from 29% in August 2024 to 42% in August 2025.
That trend moves in the right direction, and it still leaves a huge group behind.
Some retailers used the same plan name for different prices. Customers saw a “better offer” message that used the same plan name as their current plan. Many customers assumed they were already on the best plan and ignored the prompt.
It’s a dirty dog move.
The ACCC responded and opened an investigation into energy plans that could mislead consumers about savings. The ACCC also highlighted confusion from identical plan names and prompts that point people to plans they cannot access.
This part matters for you in NSW.
- You should ignore plan names.
- You should compare rates, daily charges, and conditions.
- You should confirm eligibility before you switch.
Energy Bill Relief Ended, So Switching Matters More
Government bill relief helped many households through 2025.
Energy.gov.au says the Energy Bill Relief Fund provided up to $150 in rebates from 1 July 2025 to the end of 2025, and providers applied the rebates automatically in instalments for most customers.
That relief stopped at the end of 2025. That change can expose an expensive plan fast.
The ACCC told households to offset the loss of rebates by switching to a different plan. The ACCC said many households could replicate the value of the ended rebates by changing plans.
What You Can Do in NSW Right Now
You can tackle the loyalty penalty without turning your life into an Excel project. You can do it with one bill, one comparison, and one phone call.
Step 1. Pull the right info from your bill
You can use a recent bill. Use the last full quarter if possible.
You can note these items.
- Your daily supply charge.
- Your usage rate in cents per kWh.
- Your time-of-use rates, if you have time-of-use.
- Your controlled load rate is if you have a controlled load.
- Any discounts and their rules.
- The plan name and plan start date.
- The “better offer” message and the estimated savings.
Step 2. Use Energy Made Easy for a proper NSW comparison
Energy Made Easy gives NSW households a free government comparison tool.
Energy Made Easy says it offers a free Australian Government energy price comparison service for households and small businesses in NSW, and it helps you compare plans across retailers in your area.
Energy Made Easy explains that its plan search estimates likely future costs based on your historical usage or, in some cases, typical usage for similar households in your suburb.
You can treat the estimate as a guide and still confirm rates on the retailer’s fact sheet before you sign.
Step 3. Call your current retailer and ask for the cheapest plan
Many people assume switching means changing retailers. You can also save money by switching plans within the same retailer.
The ACCC said an average NSW household could save $300 per year by moving to the cheapest plan offered by their existing retailer.
You can make this call short and direct.
Phone script you can use with your retailer
- I want your cheapest plan for my meter type and my tariff.
- I want the cheapest plan you offer to new customers and switching customers.
- I want the supply charge and usage rates for that plan.
- I want the rates in writing by email.
- I want the start date and end date for any discount or benefit.
- I want the complete list of fees, including late fees and payment fees.
- I want you to confirm that I can access the plan today.
- I want you to estimate the annual cost difference using my last bill.
You can then compare that offer with the top results from Energy Made Easy. You can switch to the better option.
Step 4. Watch the common traps before you switch
Retailers design plans to look good in ads. Plans can still cost more in real life.
You can avoid the most common traps with a quick check.
Conditional discounts:
Some plans offer discounts that depend on strict conditions. A missed due date can wipe out the discount. You can ask the retailer how the plan prices change when you miss the condition.
Same name plan tricks:
Some retailers reuse plan names for different prices. You can compare the rates, not the name.
Short intro deals:
Some plans start cheap and rise after a few months. You can ask for the date the intro pricing ends, and you can add a reminder to review the plan before that date.
Fees that bite:
Some plans include fees that add up. Fees can include late payment fees, paper bill fees, or payment processing fees.
You can still see changes soon because of reforms, and you should still check the plan today.
New rules start on 1 July 2026
Energy.gov.au summarised a set of reforms and said the rules will start on 1 July 2026.
Energy.gov.au says these reforms will:
- Limit retailers to one price increase every 12 months for market retail contracts.
- Stop customers from paying more than the standing offer price when an initial offer changes or expires.
- Ban excessive charges, such as late payment fees.
- Require retailers to offer a fee-free payment method.
- Prohibit retail fees for vulnerable consumers and push for better outcomes for customers in hardship.
Hardship Focused Rules Start On 30 December 2026
Energy.gov.au says the parts that assist hardship customers will start on 30 December 2026.
This date matters for people who already struggle with bills. This date also matters for fairness across the whole market.
Default Market Offer Reform In 2026
The DMO shapes the NSW market by acting as a benchmark and a safety net cap.
Minister Chris Bowen said the government will deliver a reformed pricing mechanism in 2026. He said the mechanism will aim to get the best deal for consumers and will still set the maximum price retailers can charge for standing offers in DMO regions.
These reforms should help, and they should also push more debate about what costs retailers can pass on through the benchmark.
Wrap Up for NSW Households
The loyalty penalty still bites in 2026.
The ACCC said households on the same plan for more than three years pay $221 more per year on average than customers on new plans.
The ACCC said an average NSW household could save $300 per year by moving to the cheapest plan offered by their current retailer.
You can protect yourself with a simple routine.
- You can compare plans on Energy Made Easy.
- You can call your retailer and request the cheapest plan in writing.
- You can repeat the check every year, and you can repeat it after any price change notice.
Reforms start on 1 July 2026, and another set begins on 30 December 2026. These reforms should reduce nasty surprises, but you still save the most when you act like a switcher.
At PSC Energy, we stay on top of trends and news in the solar industry. When there are changes from energy retailers, we think you need to know about it.
As we mentioned above, solar energy systems are a great way to break from from the burden of your electricity bill. We’re here when you’re ready to have a look at what solar can do for you. It’s what we do.
If you’re interested in learning a bit more about budget plans for electricity, you might want to check out the following article titled, 10 Cheapest Electricity Providers in Sydney.
FAQ: Loyalty Penalties
What is an electricity loyalty penalty in NSW?
A loyalty penalty means you pay more because you stay on the same electricity plan for a long time. The ACCC said households on the same plan for more than three years paid $221 more per year on average than customers on new plans.
How much can I save by switching electricity plans in NSW?
The ACCC said an average NSW household could save $300 per year by moving to the cheapest plan offered by their current retailer. Your savings will depend on usage and tariff type, but switching can still save you money.
Do I need to change retailers to beat the loyalty penalty?
You can beat the loyalty penalty without changing retailers. You can ask your current retailer for its cheapest plan for your meter and tariff, and switch plans within the same company. The ACCC highlighted this approach for NSW households.
What is the Default Market Offer in NSW?
The Default Market Offer acts as a regulated safety net price for standing offers in NSW and other DMO regions. It also acts as a benchmark for comparing market offers.
Why do “same name” electricity plans cause confusion?
Some retailers reuse identical plan names for plans with different prices. Customers can see a “better offer” message that uses the same plan name as their current plan, leading them to assume they already have the best deal.
What did the ACCC do after the complaint?
The ACCC announced an investigation into energy plans that could mislead consumers about savings. The ACCC also highlighted confusion caused by identical plan names and prompts that point customers to plans they cannot access.
What is Energy Made Easy?
Energy Made Easy is a free Australian Government energy price comparison service for households and small businesses in NSW and other NECF states. You can use it to compare plans across retailers in your area using your bill data.
What do I need before I compare electricity plans on Energy Made Easy?
You need a recent bill and basic household details. Energy Made Easy says its plan search estimates likely future costs based on your historical usage, so real bill data improves the estimate.
What rules start on 1 July 2026 for electricity retailers?
Energy.gov.au says new rules start on 1 July 2026 and limit retailers to one price rise every 12 months, ban excessive late payment charges, require a fee-free payment method, and prevent customers from paying more than the standing offer price when an initial offer changes or expires.
What rules start on 30 December 2026?
Energy.gov.au says the parts that assist hardship customers start on 30 December 2026.
What did Chris Bowen say about Default Market Offer reform?
Chris Bowen said the government will deliver a reformed pricing mechanism in 2026. He said the mechanism will aim to get the best deal for consumers and will still set the maximum price for standing offers in DMO regions like NSW.
What work did the AER start on the Default Market Offer 2026–27?
The AER released an issues paper for the Default Market Offer 2026–27, and it began consultation with stakeholders. The AER described this work as part of its review process for DMO 8.
Works Cited
Australian Competition and Consumer Commission. “ACCC to Investigate Energy Plans that Potentially Mislead Consumers About Savings.” Australian Competition and Consumer Commission, 19 Aug. 2025. Accessed 16 Jan. 2026. ACCC
Australian Competition and Consumer Commission. “ACCC Urges Households to Change Electricity Plans to Help Offset Price Increases.” Australian Competition and Consumer Commission, 22 Dec. 2025. Accessed 16 Jan. 2026. ACCC
Australian Competition and Consumer Commission. Inquiry into the National Electricity Market: Report. Australian Competition and Consumer Commission, Dec. 2025. Accessed 16 Jan. 2026. ACCC
Australian Energy Market Commission. “AEMC Delivers Enhanced Consumer Protections to Help Customers Find Better Energy Deals.” Australian Energy Market Commission, 19 June 2025. Accessed 16 Jan. 2026. Australian Energy Market Commission
Australian Energy Regulator. “Default Market Offer 2026–27.” Australian Energy Regulator, 5 Nov. 2025. Accessed 16 Jan. 2026. Australian Energy Regulator (AER)
Australian Energy Regulator. Default Market Offer 2026–27: Issues Paper. Australian Energy Regulator, 5 Nov. 2025. Accessed 16 Jan. 2026. Australian Energy Regulator (AER)
CHOICE. “CHOICE Files Energy Retailer ‘Super Complaint’ with the ACCC.” CHOICE, 21 May 2025. Accessed 16 Jan. 2026. CHOICE
CHOICE. “Energy Plans Complaint.” CHOICE, 2025. Accessed 16 Jan. 2026. CHOICE
Energy Made Easy. “Energy Made Easy.” Australian Government, 2026. Accessed 16 Jan. 2026. Energy Made Easy
Energy.gov.au. “Energy Bill Relief Fund.” Australian Government, 2025. Accessed 16 Jan. 2026. Energy.gov.au
Energy.gov.au. “New Rules for Energy Retailers Help More Australians Access Better Deals.” Australian Government, 26 June 2025. Accessed 16 Jan. 2026. Energy.gov.au
Service NSW. “Compare Energy Plans with Energy Made Easy.” NSW Government, 5 May 2025. Accessed 16 Jan. 2026. Service NSW
Bowen, Chris. “Opening Address, Australian Energy Week.” Department of Climate Change, Energy, the Environment and Water, 18 June 2025. Accessed 16 Jan. 2026. minister.dcceew.gov.au
Australian Broadcasting Corporation. “Federal Government to Change Power Price Rules to Push Costs Lower.” ABC News, 17 June 2025. Accessed 16 Jan. 2026. ABC
