Your neighbour switched energy retailers eight months ago. They spent 20 minutes on a comparison site, moved to a new plan, and knocked a few hundred dollars off their annual bill. You have been with the same retailer for six years. You pay your bills on time. You have never caused a problem. And according to the latest data from the Australian Competition and Consumer Commission (ACCC), you are almost certainly paying significantly more than your neighbour for exactly the same electrons.
This is the loyalty tax. It is not a conspiracy theory or a fringe concern. It is a documented, deliberate feature of how Australian energy retail currently works, and it is costing loyal customers between $221 and $317 extra every year. Close to 2.5 million Australian households are sitting on legacy plans right now, many of them unaware that a cheaper version of their own plan is being actively marketed to new customers down the street.
The ghost plan problem
The mechanics of the loyalty tax are worth understanding clearly, because they are more sophisticated than simple neglect.
Consumer group CHOICE has documented a practice that advocates have taken to calling “ghost plans.” A retailer advertises a plan under a specific name at a specific rate. New customers signing up today receive that rate. Existing customers who signed up for the same plan two or three years ago, when it was introduced at a different price point, remain on the older, higher rate. The plan looks identical. The name is the same. The price is not.
When these customers check their bill for the mandated “Better Offer” message, they are often told they are already on the lowest available plan. And technically, in a narrow sense, they might be. They are on the lowest rate for existing customers. The rate being offered to someone new this week is a different matter entirely, quietly excluded from the comparison.
For households that have invested in rooftop solar, this dynamic carries a particular edge. The feed-in tariff a loyal customer receives for exporting solar energy back to the grid is often lower than what a new customer signing up today would get. The household that made an early commitment to renewable energy, and stayed put with the same retailer, can end up doubly penalised: paying more for the electricity they import and receiving less for the electricity they export.
The cognitive cost nobody talks about
The standard industry response to the loyalty tax is that customers are free to shop around. Comparison tools exist. Switching is straightforward. If a customer is on a suboptimal plan, the argument goes, that is a choice they are making by not engaging with the market.
This framing deserves scrutiny.
The energy market is deliberately complex. Plans vary by tariff structure, feed-in rates, daily supply charges, benefit periods, conditional discounts, and contract terms. Making a genuinely informed comparison between two plans requires a level of time, data literacy, and sustained attention that is not equally available to everyone. A retired pensioner on a fixed income, a single parent managing work and school pickups, a household dealing with a health issue: these customers are not failing to engage with the market. They are spending their cognitive resources on more pressing things, and the energy retail system is structured to extract a financial penalty from them for doing so.
The market rewards people who treat their electricity bill like an active financial instrument, and it penalises everyone else. The savvy switcher’s cheap acquisition rate is not funded by the retailer’s goodwill. It is funded, in part, by the higher margins extracted from customers who stay.
The reform taking shape
The Australian Energy Market Commission (AEMC) is currently in the process of addressing this directly. Its Pricing Review, which published a draft report in December 2025, includes a headline recommendation known as “same plan, same price”: if a retailer markets a plan under a specific name, every customer on that plan must pay the same rate. New customer discounts attached to a named plan would be effectively banned.
The public forum for the review was held in April 2026. The final report is expected in June 2026, with implementation rolling out from 2026 over approximately a decade. As of now, the reform is a draft recommendation, not a finalised rule.
The retail lobby has reframed the “loyalty penalty” as a “search reward.” Their argument is that the discount offered to new customers is a legitimate incentive that drives competition and keeps baseline prices lower for the whole market. Removing it, they contend, would flatten the competitive landscape and raise the floor price for everyone, including the very customers the reform is trying to protect.
It is a coherent argument, and it deserves to be taken seriously. It is also being made by the organisations that profit most directly from the current arrangement, which is worth keeping in mind when weighing it.
What is already locked in, regardless of how the pricing review lands, are several related reforms. From 1 July 2026, retailers are limited to raising prices once per year on market retail contracts. From 30 December 2026, stronger protections for hardship customers will require retailers to actively move vulnerable households onto their cheapest available deals rather than waiting for customers to ask. These changes do not solve the loyalty tax, but they narrow the window in which it can operate.
What a consumer duty would actually mean
Beyond the “same plan, same price” debate, a number of consumer groups, including Energy Consumers Australia, have been pushing for something more structural: a legally binding Consumer Duty framework modelled on what now exists in financial services.
Under such a framework, the burden would shift entirely. Rather than expecting customers to hunt for fairness through comparison sites and annual switching exercises, energy retailers would be legally obligated to demonstrate that they are placing each household on the plan that genuinely suits their usage profile. The onus moves from the consumer to the provider.
This is a significant conceptual shift. It treats energy not as a product to be shopped for, but as an essential service that households have a right to receive fairly. Given how central energy is becoming to everyday life, and how deeply the renewable transition is reshaping what households need from their plans, it is not an unreasonable position.
For solar households especially, a Consumer Duty approach would mean retailers actively working to match customers with the best available feed-in tariff structures and time-of-use rates for their setup, rather than quietly leaving them on legacy arrangements while better options are marketed elsewhere.
What you can do before June
The AEMC’s final report is coming. Whatever it recommends will take years to implement fully. In the meantime, the loyalty tax is running.
The most direct action is to call your retailer and ask, specifically, what rate a new customer signing up today would receive on your current plan. Not the rate on the best offer message. The new customer rate. If the answer is lower than what you are paying, ask to be moved onto it immediately. Most retailers will accommodate the request rather than lose a customer. Many customers simply never ask.
The reform is coming. Until it does, the loyalty tax continues to run on autopilot, and it stops the moment you decide to push back.
Energy Matters has been in the solar industry since 2005 and has helped over 40,000 Australian households in their journey to energy independence.
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