A Bigger Electricity Discount Can Still Be the Dearer Plan

Spring is bill season, and the plan offers that arrive with it all lead with a number. Twenty-five per cent off. Thirty per cent off. It is easy to assume the bigger number means the smaller bill, and often it does. But a discount is a percentage of something, and which something matters a great deal. The plan with the louder discount can still be the dearer one.

Our view is simple. Work out each plan’s yearly cost yourself: the usage rate times the kWh you use, plus the daily supply charge times the days, less the discount on the part of the bill it applies to. Treat the percentage off the regulator’s reference price as a first screen, not the last word. The calculator below does the sum once you type in your bill and two plan fact sheets.

What a Plan Sheet Is Made Of

Every electricity plan has two charges, and a discount usually touches only one of them.

The supply charge is a number of cents per day. You pay it whether you use a single unit or none. The usage charge is a number of cents per kilowatt hour (kWh) and rises and falls with what you use. GST sits on top of both. Energy Made Easy, the government comparison site, notes that a discount comes off one of these, and its example is a plan giving 15 per cent off the usage charge only. If the discount applies to usage alone, the supply charge carries on at full price.

How big is that untouchable slice? The Australian Energy Regulator (AER) publishes flat-rate residential caps for each default market offer region in 2026-27, GST included. We worked the reference bills back from those caps and the AER’s average annual usage for each region. Take Energex in south-east Queensland: 4,600 kWh at 27.9744 cents, plus 365 days at 192.0159 cents, comes to $1,987.68, which matches the AER’s published $1,988. The sums are ours, from the AER’s figures, and so is the last column.

Caps and reference prices: AER 2026-27 final determination, effective 1 July 2026. Supply share: our calculation.

Across these five regions, the supply charge makes up 28 to 38 per cent of the reference bill. That is the part a “usage only” discount cannot reach. Victoria sits outside this system, with its own Victorian Default Offer and the Victorian Energy Compare site, so these figures do not apply there. Wherever you live, compare every rate on the same GST basis, all including GST or all excluding it.

The Official Yardstick and Its Fine Print

The AER sets a default market offer (DMO) each year for New South Wales, south-east Queensland and South Australia. It works as a reference price. Retailers show their market offers as a percentage above or below it, and the Australian Competition and Consumer Commission (ACCC) tells shoppers they can simply compare those percentages. In its words, “A bigger percentage off the comparison price usually means a cheaper plan.”

That is sound advice, with fine print. The ACCC’s own example holds “if you use the average amount of electricity in your area”. The AER builds its reference bills on average usage of 3,900 to 4,900 kWh a year, depending on the region. If your home is nowhere near that, the percentage describes a household that is not yours.

Energy Made Easy gives the opposite warning: “A lower usage charge may actually be cheaper than getting a big discount!” It also tells shoppers to “Check if the discount is off the usage only or off the whole bill.”

So who is right? Both. At average usage, with a discount you will certainly receive, the ACCC rule works. It weakens when your use sits far from average, or when the discount is conditional or covers only part of the bill, and that is where Energy Made Easy’s caution takes over. Our ruling is to start with the percentage and finish with the sum. The percentage gets you from dozens of plans to a handful. The yearly cost picks the winner. It is the same habit as comparing a car loan refinance on total cost rather than the headline rate.

One popular misreading needs correcting. A common view online is that any plan priced above the DMO should be reported, because “it is a cap”. The AER’s cap applies to standing offers, the plan you land on when you have never chosen one. Market offers are compared against the reference price, not capped by it. The ACCC’s advice is practical: if your market offer sits above the reference price, ask your retailer for a better one. The AER reports that in the DMO regions only 8 per cent of households remain on the DMO itself, and the ACCC says about 90 per cent of households are on market offers, so the shopping happens in that second group.

Solar Sharer, an opt-in offer that needs a smart meter and includes three free hours, is a separate question and not covered here.

Worked Example One: The Discount That Covers Part of the Bill

Take a hypothetical household in the Energex frame, using 4,600 kWh over 365 days. The plans are invented for the example and carry no retailer’s name.

Plan A offers 25 per cent off usage if you pay on time. Its usage rate is 33 cents per kWh and its supply charge is 190 cents a day. Plan B has no discount, a usage rate of 24 cents and the same 190 cents a day.

Start with Plan A before the discount. Usage is 4,600 kWh at 33 cents, which is $1,518.00. Supply is 365 days at 190 cents, which is $693.50. The total is $2,211.50. The discount takes 25 per cent off the $1,518.00 usage portion only, so it is worth $379.50, and Plan A costs $1,832.00. Plan B is $1,104.00 in usage plus the same $693.50 in supply, or $1,797.50.

Plan B wins by $34.50, even though Plan A advertises 25 per cent off. The $379.50 is worth 17.2 per cent of Plan A’s bill, not 25, because the supply charge is never discounted. The headline is a quarter off one part of the bill, not a quarter off the bill.

Then there is the condition. If the household misses the pay-on-time requirement, the discount goes and Plan A costs $2,211.50, which is $414.00 more than Plan B. Energy Made Easy warns that paying late can cost you a discount, so a discount that can disappear belongs in the calculation as a risk, not a certainty. The calculator shows the total with and without a conditional discount.

Worked Example Two: When the Lower Rate Loses

The second hypothetical runs the other way. Here the plan with the lower usage rate loses at some usage levels.

Plan C charges 24 cents per kWh and 230 cents a day. Plan D charges 31 cents per kWh and 160 cents a day. Neither has a discount, so the comparison is pure plan structure.

At 4,600 kWh over 365 days, Plan C costs $1,104.00 in usage plus $839.50 in supply, which is $1,943.50. Plan D costs $1,426.00 plus $584.00, which is $2,010.00. Plan C is $66.50 cheaper.

Drop the usage to 2,500 kWh and the order flips. Plan C costs $600.00 plus $839.50, which is $1,439.50. Plan D costs $775.00 plus $584.00, which is $1,359.00. Plan D is $80.50 cheaper.

The turning point is a short piece of arithmetic: divide the supply difference over the year by the usage rate difference. Plan C’s supply costs $255.50 more across the year (70 cents a day times 365 days), and its usage rate is 7 cents lower. Divide $255.50 by $0.07 and you get 3,650 kWh. At that usage the two plans cost exactly the same. Above it, the lower usage rate wins. Below it, the lower supply charge wins.

Who sits where? A small household, a unit, or a home with light air-conditioning use leans toward the low supply charge. A big household, a home office or an electric vehicle leans toward the low usage rate. For electric vehicle owners the rate that matters most may be the overnight one, which our guide to charging an electric car at home in Australia covers.

This also speaks to the most common complaint about electricity bills. A common view among households online is that supply charges feel out of control and punish low users. The complaint has a fair point: the supply charge is a real fixed cost, and a low-use home is right that it dominates the bill. The crossover sum shows exactly when a lower supply charge wins, so a low-use home can shop for one deliberately rather than just resent it.

Five Questions to Ask Before You Switch

Once the numbers point at a plan, check the conditions around them. Energy Made Easy’s Discounts and fees page is the source for questions 4 and 5, on the benefit period and the exit fee, and the answers to all five sit on the plan’s fact sheet.

1. Does the discount come off usage only, or the whole bill? This changes the maths more than any other single detail.
2. Is the discount guaranteed or conditional? Paying on time and paying by direct debit are common conditions.
3. What happens if you miss the condition? Work out the total with the discount removed. The calculator shows it.
4. How long does a benefit period last, and what price follows? A rate that holds for a year and then rises is a different plan from one that holds.
5. Is there an exit fee, and when does the price change next? A cheap plan that reprices in three months is not the plan you compared.

If a fact sheet does not answer one of these, that is worth knowing before you sign.

Getting Your Numbers and Acting on Them

Start with your latest bill. You need four numbers: the kWh you used, the days the bill covers, your current usage rate and your daily supply charge. For a full-year comparison, add up a year of kWh and use the days in that year.

Then use the official comparison tools. Energy Made Easy covers New South Wales, Queensland, South Australia, Tasmania and the ACT. Victorian Energy Compare covers Victoria. Open the fact sheet for each plan you are considering and copy its usage rate, supply charge and discount terms into the calculator. A common view online is that plans listed on a comparison site are sometimes not available at your address when you try to sign up. If that happens, go back to the plan’s own fact sheet and work from the rates it states.

Finally, ring your current retailer. The ACCC suggests asking for their best plan below the reference price before you move. Loyalty is not always rewarded, and it is one of the quiet ways people end up paying more than a new customer would. A five-minute call, armed with your own yearly sum, is a stronger position than a vague complaint.

The Sum Before the Switch

The percentage off the reference price is a good first screen, and the ACCC is right to recommend it. It is not the last word. A discount that covers only usage, a condition that can fall away, or a supply charge that suits a different household can each turn the cheapest-looking plan into the dearer one. Work out the yearly cost from your own usage and days, use the crossover sum when two plans are close, and let the total decide.

Sources: Australian Energy Regulator, Default market offer prices 2026-27: Final determination (https://www.aer.gov.au/system/files/2026-05/AER%20-%20Final%20determination%20-%20Default%20market%20offer%202026%E2%80%9327.pdf); Australian Energy Regulator, Information Kit: Default Market Offer 2026-27 (https://www.aer.gov.au/system/files/2026-05/Information%20Kit%20-%20Default%20Market%20Offer%20-%202026-27_0.pdf); Energy Made Easy, Don’t be dazzled by discounts (https://www.energymadeeasy.gov.au/hot-topics/dont-be-dazzled-by-discounts); Energy Made Easy, Discounts and fees (https://www.energymadeeasy.gov.au/article/discounts-and-fees); ACCC, Electricity prices and plans (https://www.accc.gov.au/consumers/specific-products-and-activities/electricity-prices-and-plans)