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What is the ‘loyalty tax’?

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What is the ‘loyalty tax’?
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On Wednesday 9 August 2017, seven of Australia’s biggest power companies were summoned to Canberra to discuss the rising cost of electricity for consumers and the lack of transparency they have over their electricity plans and usage.

The Australian energy industry isn’t protecting consumers from high prices, particularly the most vulnerable, and now the Federal Government has asked these power companies to make things better for consumers. One of the ways the government is requiring this to happen is that retailers must stop taxing customers for their loyalty.

Powershop has never taxed customers for their loyalty.

What is the loyalty tax?

The ‘loyalty tax’ is a ploy that some electricity retailers have employed where they use attractive discounts or offers to acquire customers, but these ‘benefits’ expire after a fixed period – usually 12 months. After this time, the customer is often moved onto an offer based on the retailers standing offer, or an equally unattractive market offer. These offers are generally much more expensive than what the customer signed up to initially and more expensive than the retailer’s best available offer.

This policy has allowed a lot of the big retailers to ‘rip-off’ loyal customers that have stayed with them for longer than the fixed benefit period of their contract. In July, the Australian Energy Regulator estimated that some customers could save as much as $1,000 a year by switching to a better offer.

Does Powershop charge the loyalty tax?

Powershop has not charged, and will not charge, you for your loyalty. We made a conscious decision when we launched in Australia not to charge customers for their loyalty. No matter when you or your household joined Powershop, you always have access to the best deal available in your area. We have always ensured fairness for all our customers and we will continue to do so.

How do I know I’m on Powershop’s best deal?

If you’re with Powershop, you can rest assured that no matter how long you’ve been with us, you have access to our best deal available in your area. We do not have fixed benefit periods or lock in contracts. Here are some things you can do to help save more:

  • If you’re a Powershop customer, use our online usage tools to help you manage your electricity usage. The more you know about your usage, the more you can do to try and use less which means you can save more. Plus, using less is better for the environment – so its win-win all round!
  • Shop around! Whether you’re a Powershop customer or not, it’s a good idea to check your current deal against others in the market. If you aren’t a Powershop customer, you can also try out our instant bill comparison tool to see whether we can save you money.
  • There are a number of concessions available for eligible customers, which provide discounts, grants or rebates on electricity bills. More info about these, and how to apply, can be found here: http://www.powershop.com.au/concessions/.

How does Powershop’s deal compare to other deals in the market?

It can be really hard to compare energy offers as there’s often fine print and confusing lingo and numbers. We’re always here to help you compare and we encourage consumers to be informed about their electricity deal. If you’re going to compare deals in the market, make sure you compare rates not discounts. Some retailers try to lure you in with higher discounts that often expire. That means you’ll be exposed to the loyalty tax and you’ll pay a lot more when the deal expires. With Powershop, no matter how long you’ve been with us, you always have access to the best deal available in your area.

Why do you make me log in to get the best discount?

We encourage you to log in because we want you to use our tools as they can help you understand how much power you’re using. You can then make decisions about how to use less, and therefore save more. With Powershop’s usage tools, you can keep an eye on how much electricity you’re using at any time of the month, which helps you to avoid bill shock. Plus with the various ways you can pay at Powershop (past, present, future and even buy-now pay-later options), we give you more control over your electricity bill.

We see the discount as a reward to encourage you to log in. By logging in to your account you have access to information about the power you’re using and therefore the ability to change your usage patterns. The electricity industry in Australia is confusing and lacks transparency, so at Powershop we’ve designed the tools to give you all the information you need to take back control of your electricity usage.

What if I don’t have a smart meter?

If you have a basic meter (which is likely if you live in NSW or South East QLD), then you’ll need a smart meter installed to get the most out of our usage tools. If you’d like a smart meter we’re happy to organise installation at no upfront cost in most situations. Register your smart meter request here and we’ll be in touch.

What are you doing for customers who can’t afford to pay their bills?

The number one thing we do is not charge the loyalty tax to any customers. In addition to this, we have a hardship program that can help our customers who are having difficulties making payments.

Powershop also supports a number of concessions, which are available for eligible customers and which provide discounts, grants or rebates on your electricity bill. More info and how to apply, can be found here: http://www.powershop.com.au/concessions/.

We also provide lots of info through our online tools and other channels to help our customers better understand their energy usage. Knowing more about how you use power can help you use less, which means you can save more.

What else is Powershop doing to try and make the electricity industry better?

Here are some of the things that Powershop does to try and make the Australian electricity industry better.

  • The electricity we sell is 100% carbon neutral – at no extra cost to our customers.
  • We won’t door knock at your home. We don’t like it happening to us, so we bet you don’t enjoy it either. You’ll never have Powershop knocking at your home trying to convince you to switch to us.
  • We strongly support the RET.
  • We’ve helped our customers raise over $250,000 for community energy projects through the Your Community Energy initiative.

Powershop have discounts as well. How do I know you’re fairer?

We acknowledge that the electricity market in Australia is super confusing. To be able to remain competitive in the market, we have developed a discount structure, which we think is the fairest way to provide customers with the best deal. There are lots of ways we’re fairer.

  • We don’t charge the loyalty tax. We never have, and we never will.
  • We show the discounted usage rate and daily supply charge in every single Powerpack we sell, so you can easily compare our rates.
  • Powershop discounts are taken off both the usage rate and the daily supply charge, unlike a lot of other retailers who only discount the usage rate.
  • We have no lock-in contracts and no hidden charges.
  • All the electricity we sell is 100% carbon offset at no extra cost to our customers.
  • We’ve been ranked Australia’s Greenest Power Company two years running (2014 and 2015).
  • We’ve won Canstar Blue’s – Most Satisfied Customers, Electricity Providers VIC two years in a row (2015 & 2016).

How do I compare your discounts to other discounts in the market?

We encourage you to compare rates instead of discounts. Comparing usage rates gives you a more accurate comparison between retail offers. If you’re a Powershop customer your rates are available in your online account and the Powershop app. If you’re not a Powershop customer you can use our bill compare tool to see if we can save you money.

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