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The electricity and gas market in Australia is a complicated topic, with everything from rules and regulation, to available energy retailers, to concessions and rebates changing on a state-by-state basis. While most Australians can now choose their energy provider, and have more of a say in the energy market than ever before, there is still a lot of confusion surrounding everything from how the energy market works, to choosing providers, to renewable energy.

The National Electricity Market

The National Electricity Market, or NEM, is the interconnected network of governing and regulating bodies, infrastructure, generators, retailers, distributors, and consumers who make up the energy market in most of Australia. First developed in 1998, the NEM was created to help facilitate the transmission of electricity between states and territories, while increasing competition among retailers, and protecting consumers from rising electricity prices and bad practices.

Today, the NEM regulates all aspects of the electricity and parts of the gas market in Queensland, New South Wales, the Australian Capital Territory, Victoria, Tasmania, and South Australia, with certain aspects having been adopted by the Northern Territory and Western Australia.

Energy providers in Australia

According to the Australian Energy Market Commission, there are 39 active energy retailers within the NEM, and 19 gas retailers, though individual states or territories might have less depending on regulation. Energy retailers are divided up into three categories; The Big Three, which are the three largest and historic energy retailers; Tier 1, which are energy retailers with over 10% market share but don’t carry the same historic name-recognition as The Big Three; and Tier 2, who are smaller energy retailers making up the rest of the energy market.

Deciding whether you want one of The Big Three, Tier 1, or Tier 2 as your energy retailer is simply a personal choice. While you might get the best discounts available with one of the largest retailers, you might not get the same personalized customer service experience as choosing a smaller, less well known retailer. If you have solar PV installed on your roof, or want to ensure you’re doing your part for the environment, many of the Tier 2 retailers have a green and renewable energy approach, including high solar feed-in-tariffs or community-based initiatives.

The Big Three energy retailers

The Big Three energy retailers are AGL, Origin Energy, and EnergyAustralia. These are the largest and most historic energy providers in the NEM and make up the largest collective market share. Many customers opt to choose one of the Big Three when choosing an energy retailer, for many reasons such as:

  • Household name recognition: The Big Three have some of the biggest household name recognition in the country, making it easy to choose when deciding on an energy provider
  • Security: Customers know that due to their big market share, their energy provider probably won't go under when choosing one of the Big Three as their retailer
  • Competitive and flexible plans: With their large market share, customers have more flexibility when choosing a plan when it comes to The Big Three and will often get bigger discounts

Tier 1 energy retailers

In addition to The Big Three, other large retailers holding more than 10% of the energy market share in Australia individually, make up Tier 1 energy providers. These include:

These providers don’t have quite the same name recognition as The Big Three but can still offer competitive energy rates and multiple plans with high discounts.

Tier 2 energy retailers

The remainder of the energy providers in Australia make up the Tier 2 retailers list. These smaller, and generally less well known, often do away with confusing and conditional discounts in favour of low rates.

Some of the Tier 2 retailers, such as Energy Locals and Powerclub, offer wholesale pricing for a monthly or yearly membership fee, giving you the best rates possible for your energy. Others, such as Diamond Energy or Powershop offer the best options for green energy-minded people with high solar feed-in-tariffs or 100% green energy offset. Meanwhile, those interested in giving back to the community through different renewable initiatives might find providers such as Enova Energy or DC Power Co as the best choice for them.

Energy pricing: The Reference Price and energy plan discounts

When comparing energy providers, you’ll often see “X% off the reference price” in their plan details. This is how much of a discount you’ll receive on this energy plan, when compared to the government-set Default Market Offer (DMO) or Victorian Default Offer (VDO), better known as the reference price. The reference price is often used as a cap to energy prices in Australia, and energy providers are legally obligated to tell you how much less (or more, in some cases) their plan is when compared to the reference price.

Energy plan discounts fall into a few different categories:

 Low rates: This simply means that the base rate for your daily supply charge and price per kWh of usage are low. Many Tier 2 providers offer low rates, often at fixed prices for 12 months.

 Conditional discounts: These are discounts you receive that have a condition attached. More often than not, these conditions include pay on time discounts, or direct debit discounts. Tier 1 and The Big Three retailers often offer these discounts to customers and can be a good deal if you know you can meet them consistently.

 Unconditional discounts: Instead of low, fixed rates, you simply get a percentage discount off your total energy bill.

 Other offers: These can be in addition to, or instead of, the above discounts. Other offers that an energy retailer might include in your plan can be points for certain membership programmes, e-gift cards, or a credit off your energy bill every 6 or 12 months.

It can be a good idea to calculate how much energy your household consumes before deciding on a low rate or percentage discount plan. Customers with lower energy consumption might be best off choosing a plan with low, fixed rates, while households with higher energy consumption might get a better deal choosing a percentage discount.

Switching energy providers in Australia

Switching energy retailers is easy to do now, thanks to government regulation. Most energy providers now offer plans with no exit fees so you don’t need to worry about terminating a plan early and getting slapped with a big fee on your final bill.

Most of the time, when you switch energy providers, your new provider will do all the difficult work for you. Simply choose your new provider, and they’ll contact your previous provider and make the switch. In Australia, you have the right to a 10 business day “cooling off period”. After signing or receiving an agreement with your new provider, you have 10 business days where you can cancel at any time without penalty and continue to have your energy provided to you by your old retailer.

Once you’ve switched to a new energy provider, your old one will continue to supply you energy until your next meter reading (usually every 3 months unless you request a special meter reading or have a smart meter). Once you have your meter read, your old provider will send you a final bill and you’ll be transferred to your new provider for good.

Energy billing and paying an electricity or gas bill

Energy bills, while traditionally posted through the mail, are more and more commonly being sent by email (also known as e-billing). While you can still opt for paper bills, these will often come with a fee of up to $3 or more per bill.

Energy bills, though different for each provider, usually have the same information on them including:

  • Personal details, National Meter Identification, and date of bill
  • Amount owed, any credits you might have, and bill due date
  • Billing period
  • The meter reading used for your bill, in kWh and MJ for electricity and gas respectively. If your bill was based on an estimate, it will be marked as such
  • The rates for your energy plan
  • Other charges such as GreenPower
  • Other rebates such as solar feed-in-tariffs or concessions
Most energy providers offer different ways to pay your electricity or gas bill, including direct debit, online, over the phone, by mail, or BPay. If you’re experiencing financial hardship and don’t believe you will be able to pay your bill, it is best to get in contact with your energy retailer as soon as possible to work out a payment plan or find out what concessions or rebates might be available to you.

Renewable energy in Australia

Renewable energy is becoming increasingly popular at every level of the Australian energy market. More and more renewable energy generation methods are being built and developed, while more energy retailers are choosing to go 100% green or 100% carbon offset on their energy plans. This doesn’t even include the fact that 21% of all households in Australia now have solar PV systems installed on their houses, according to the Australian Renewable Energy Association.

In 2019, Australia met its renewable energy target of 23.5% as reported by the Department of Industry, Science, Energy and Resources, with this number expected to grow in the coming years. As renewable energy technology becomes increasingly less expensive and more small households and businesses are able to install small-scale renewable generators (such as solar panel systems), the way energy is produced and consumed in Australia will definitely change in the near future.