Stop Paying the 'Loyalty Penalty': The 2025 Step-by-Step Guide to Comparing Australian Electricity and Gas

The Hidden Cost of Staying Put: Understanding the 'Loyalty Penalty'

💡 Australian households that switched electricity plans saved an average of $317 per year — yet millions of customers are still sitting on outdated deals, quietly handing that money back to their retailer. (Source: ACCC)

If your energy bill feels like it keeps creeping up despite your best efforts to cut back, you're probably not imagining it. You're likely paying what's known as the 'loyalty penalty' — the widening price gap between the expensive plan long-term customers get stuck on and the far cheaper deals retailers offer to attract new sign-ups.

Here's how it works: energy retailers rely on customer inertia. They know most people won't bother switching, so they quietly shift existing customers onto less competitive rates while dangling attractive discounts in front of new ones. The math is brutal. According to the ACCC's December 2022 inquiry into the National Electricity Market, customers who stay on the same plan for two or more years pay an average of 16.9% more than those on newer market offers.

ACCC Commissioner Anna Brakey put it plainly: "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."

The good news? A proper electricity and gas comparison doesn't require a financial degree or a free afternoon. It's a roughly 15-minute task with a realistic $300+ annual return.

To do it accurately, though, you'll need the right data from your bill — and that's exactly where this guide starts.

Step 1: Gather Your Usage Data (The Secret to Accuracy)

Knowing you're overpaying is one thing. Proving it — and finding a genuinely better deal — requires the right data. Before you run any electricity and gas comparison in NSW residents (and those in other states) rely on, pull out your last two electricity and gas bills. Here's exactly what to look for.

1. Find Your NMI and MIRN

Your NMI (National Meter Identifier) is a unique 10 or 11-digit number printed on your electricity bill, according to Energy Made Easy. It identifies your specific connection point to the grid. Your MIRN (Meter Installation Registration Number) does the same job for gas. Both are non-negotiable when switching retailers — without them, a comparison can't be accurately completed.

2. Identify Peak vs. Off-Peak Usage

Most bills break down consumption into peak and off-peak periods, usually on the second or third page. These rates vary significantly, and a plan that looks cheap at the headline rate can cost far more if your household runs appliances during peak hours.

3. Separate Controlled Load Usage

Controlled Load (often labeled CL1 or CL2) covers dedicated circuits like electric hot water systems. This usage is metered and billed separately at a lower rate. Mixing it up with general usage will skew any comparison you run.

Verification Checkpoint: Check your bill for the word "interval" or "smart meter." If you have a smart meter, you're eligible for time-of-use (TOU) plans — which can either save or cost you money depending on when you consume energy.

💡 Pro-Tip — Reading the Bar Graphs: The bar graph on your bill shows your daily average usage across billing periods. Look for seasonal spikes. A retailer quoting based on average usage could underestimate your actual costs if your summer or winter consumption is significantly higher.

Once you have these numbers in hand, the next step is understanding what they're actually being measured against — and that's where your bill's reference price tells an important story.

Step 2: Deciphering the Bill—Reference Price vs. Market Offer

With your usage data in hand, the next challenge is understanding what you're actually being charged against — and why that benchmark matters enormously.

The Safety Net You Probably Didn't Know Existed

Australian energy regulators created a pricing safety net to protect customers from runaway charges. In NSW, South Australia, and Queensland, this is called the Default Market Offer (DMO). Victoria operates its own version, known as the Victorian Default Offer (VDO). Whether you're doing an electricity and gas comparison in Victoria or across other states, these reference prices serve the same purpose: they cap what retailers can charge customers who never actively chose a plan.

Think of the DMO/VDO as a ceiling, not a target. The default offer exists to protect disengaged customers — not to represent a fair price for informed ones.

Market Offers: Where the Real Savings Live

Below that ceiling sit market offers — competitive plans retailers use to attract and retain customers. These typically price 10–20% below the reference rate, and they're where most engaged households end up saving real money. According to the ACCC Electricity Market Inquiry, approximately 2.6 million Australian households are currently paying at or above the default offer rate, with over 400,000 paying more than 10% above it.

Watch Out for Conditional Discounts

Not all market offers are straightforward. Many come loaded with conditional discounts — savings that only apply if you pay on time, sign up for direct debit, or go paperless. Miss one bill, and that discount evaporates, potentially pushing your effective rate back toward — or even above — the default.

✅ Verification Checkpoint

Pull out your latest bill and look for the reference price comparison, which retailers are now required to display. Ask yourself: Is my plan listed at or above the DMO/VDO?

• Does my discount have conditions attached?

If either answer is yes, you have room to move — and the next question worth exploring is whether your energy type is also working against you.

Step 3: The Great Debate—Natural Gas vs. Electricity Costs

Once you understand your bill structure, a bigger strategic question often surfaces: should you even keep your gas connection? A proper natural gas vs. electricity cost comparison reveals some genuinely surprising numbers — and the answer affects far more than just your energy plan.

Heating: One Connection Wins

Running both a gas and electric connection means paying two daily supply charges. In practice, that's roughly $0.80–$1.10 per day for gas, on top of your electricity supply charge, before you've used a single unit of either fuel. That's potentially $400+ per year just to keep the gas pipe connected.

Compare that to a modern reverse-cycle air conditioner. According to Energy.gov.au, these units operate at 300–600% efficiency — meaning every one unit of electricity consumed generates three to six units of usable heat. Gas ducted heating simply can't match that ratio. In practice, switching to reverse-cycle often reduces heating costs even when electricity rates are higher per unit, because so much less energy is consumed overall.

Winner: All-electric with reverse-cycle air conditioning, particularly if eliminating the gas supply charge entirely.

Cooking: Gas Has Loyal Fans, But Numbers Tell a Different Story

Gas cooking is beloved for its instant heat and control. However, induction cooktops are significantly more efficient — they transfer around 85% of energy directly to the pan versus roughly 40% for gas. With gas prices rising faster than inflation in several states, the cost gap is widening.

Winner: Electric induction, on cost-efficiency grounds.

Hot Water and Electric Vehicles: The Electrification Momentum

Heat pump hot water systems use the same principle as reverse-cycle heating — exceptional efficiency — and can dramatically undercut gas water heater running costs.

The long-term trajectory is clear: Australian homes are steadily electrifying. Electric vehicles charged at home overnight rates (often $0.10–$0.18 per kWh on off-peak tariffs) cost a fraction of equivalent gas mileage — another reason a single, well-chosen electricity plan is increasingly the smarter foundation.

Winner: Electric, across hot water and EV charging.

Of course, the exact savings depend heavily on which electricity plan you're on — and that varies significantly depending on your state. That's precisely where the regional differences, covered next, become critical.

Step 4: Regional Nuances—Comparing NSW and Victoria

The comparison process isn't one-size-fits-all across Australia. Where you live shapes which tools you use, what protections apply, and how aggressively retailers must compete for your business. NSW and Victoria operate under notably different frameworks — and knowing those differences puts you in a stronger negotiating position.

NSW: Energy Made Easy and the DMO

In New South Wales, the government comparison tool Energy Made Easy is your primary resource. It pulls live offers from all authorized retailers and lets you model scenarios against your actual usage. The key benchmark here is the Default Market Offer (DMO) — the price cap set annually by the Australian Energy Regulator. Think of the DMO as a ceiling: any offer below it represents a genuine saving, and the gap tells you exactly how much the loyalty penalty is costing you.

Verification Checkpoint: NSW bills must display your retailer's best available offer. If yours doesn't, that's a red flag worth querying directly.

Victoria: Victorian Energy Compare and Stronger Consumer Protections

Victoria operates its own platform — [Victorian Energy Compare](https://www.victorianenergy compare.vic.gov.au) — and benefits from a more decoupled market where retailers set prices independently of a single reference tariff. This creates sharper competition, but also more complexity. Importantly, Victorian Energy Compare confirms that Victorian retailers are legally required to notify you at least once every three months if a cheaper plan is available — a "Best Offer" obligation that NSW households don't automatically receive.

The $250 Power Saving Bonus program, while no longer broadly active, demonstrated how quickly Victorian households benefited when prompted to compare — a pattern that holds true today regardless of bonus incentives.

A practical note: debates around whether are electric cars cheaper to operate than gas-powered vehicles follow a similar logic to home energy — the answer depends entirely on your state's tariff structure and how actively you compare plans.

Once you've mapped your regional rules and identified your best offer, the next step is making the switch — and knowing exactly what to expect when you do.

Step 5: Executing the Switch and Verifying Your Savings

Finding the most affordable energy supplier for your situation means nothing if you don't follow through. Here's your action checklist to make the switch stick.

Your 5-Step Switching Checklist:

• Run the comparison and commit. Screenshot or save the quoted rates before you sign anything. That offer is your benchmark.
• Sign up directly through the new provider. You don't need to call your current retailer — the new provider handles the transfer automatically. No awkward breakup conversation required.
• Use your safety net. Under Australian Consumer Law, you have a 10-business-day cooling-off period to cancel the new contract without penalty. If something feels off, use it.
• Set a 'Comparison Calendar' reminder. Schedule an alert 12 months from today. Introductory discounts expire, and without a reminder, you'll slide straight back into loyalty penalty territory.
• Verify your first bill. When that first statement arrives, check every line item against the quoted rates. Discrepancies happen — catching them early protects your savings.

The bottom line: Switching energy providers is genuinely straightforward once you understand the process. As 80% of Australians are currently overpaying, the real cost is inaction.

Stop paying the loyalty penalty. Run a comparison today — your next bill will thank you.

Key Takeaways Is my plan listed at or above the DMO/VDO?

• Does my discount have conditions attached?
• Run the comparison and commit. Screenshot or save the quoted rates before you sign anything. That offer is your benchmark.
• Sign up directly through the new provider. You don't need to call your current retailer — the new provider handles the transfer automatically. No awkward breakup conversation required.
• Use your safety net. Under Australian Consumer Law, you have a 10-business-day cooling-off period to cancel the new contract without penalty. If something feels off, use it.