A growing number of small electricity and gas retailers are actively turning away customers, or at least delaying their sign-up, as turmoil in the wholesale market leaves them unable to compete.
Some of the worst-hit businesses, including ReAmped and Discover Energy, have told tens of thousands of existing customers to seek better deals elsewhere, and others are taking the step of preventing new sign-ups, at least until they have factored the the latest price hikes into their offers.
Amber Electric, for example, is inviting only those households with solar and/or a battery to go ahead and sign up, but tells those without to hold off.
“In the short term, most homes without solar or a battery may be better off financially on a traditional retail pricing model,” Amber says. “However, many retailers are likely to raise their prices when the new financial year begins.
“We’ve seen that most users will be better off buying wholesale power in the long run – typically being rewarded for using more renewables with cheaper bills when the market is normalised,” it adds, finally asking non-solar customers to sign up for updates on pricing and when to switch.
Diamond Energy, meanwhile, advises that it will “delay” the transfer of customers seeking to switch until it can notify them of its new rates.
“With the significant increases in wholesale electricity prices, we are expecting to increase our rates and amend our discounts and solar feed in tariffs,” its website says.
“Come back soon,” says Electricityinabox, when you try to sign up there. “The wholesale market has experienced huge price increases and as a result we have to repricing (sic) our plans.
“Once complete we will publish here and be accepting customers again shortly,” it says.
“Sorry, we can’t help today,” says ReAmped Energy’s page (above). “Unfortunately we are not currently accepting new customers, due to elevated wholesale energy prices. Check out Energy Made Easy or Victorian Energy Compare to find the right plan for you.”
In a recorded video message shared on social media platforms including Facebook and Twitter, ReAmped CEO Luke Blincoe, explains further why he is urging his 70,000-odd customers to jump ship.
“We’ve worked really hard over the last few years to save Aussie families literally millions of dollars. But right now we can’t keep doing that.
“It guts us to give you this advice, but … right now with the way the energy market is, we simply can’t do that other than by giving you the best advice we can. That is that you’re better off with another electricity retailer than us.”
Equally bleak is Discover Energy’s message – although it says it will continue to provide VPP services to customers with solar, battery and EV chargers, and to support the installation of solar and batteries.
“Unfortunately, today the message we want to convey to you is that we are currently not the most competitive gas and electricity retailer in the market,” Discover’s co-CEOs Anson Zhang and Jeff Yu write.
“We encourage you to do your market research to find the best possible plan to suit your needs and if you happen to find a better alternative to Discover Energy at this point, we understand your need to switch providers.”
Zhang and Yu go further to explain that the NEM and domestic gas markets in 2022 are witnessing extreme and consistent high prices that have not been experienced for more than a decade.
“This is being driven by black coal, hydro and gas generators who are bidding electricity prices higher in response to internationally increased prices for coal and gas, which in turn are driven by the unprecedented events in Europe and the knock-on effects of Covid-19,” it says.
“This impacts the entire industry and has meant that many small energy retailers, including ours, have been left with no choice but to increase household energy consumption rates accordingly.”
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The companies most feeling the pain come from the new guard of energy retailers that made bets of varying sizes that the proliferation of large and small-scale renewables in Australia would continue to drive down wholesale electricity prices – as seen in the reduction in the 2021-22 Default Market Offers that promised to deliver more than $65 million in bill savings.
By tethering their market offers more closely to wholesale prices, which were also regularly dipping into negative territory in states like South Australia and Victoria, these retailers were able to pass on attractive savings to customers.
But costs were also cut by scrimping on investment in some of the safeguards used by traditional retailers, such as “hedges,” which provide at least some insulation from market aberrations such as we are currently seeing.
See David Leitch: Australia’s electricity markets are on crack: It’s time to do something
The bulk of the “come back soon” messages come less than one week after the Australian Energy Regulator announced a double-digit percentage increase in the benchmark electricity price for some NEM states.
In its latest default market offer determination, the AER advised that the default market offer for consumers in New South Wales would increase by between 8.5 and 14.1 per cent, while households in south-east Queensland would see benchmark electricity prices rise by 11.3 per cent.
The average New South Wales consumer will pay between $119 to $227 more in annual electricity costs, while the increase for south-east Queensland and South Australian consumers will be $165 and $124, respectively.
The news was not quite so bad in Victoria, whose default offer, set earlier this week, pointed to a 5 per cent increase in electricity prices.
