Policy
The regulator put a number on the loyalty tax, then chose to shine a light on it, not end it
Customers on electricity plans more than three years old pay $221 a year more than customers on new plans, the ACCC found. The rule-maker's draft fix was to make retailers charge everyone on the same plan the same price. Its final report, in June, dropped that for a lighter rule: tell long-loyal customers what they could have saved. Nine consumer groups say that leaves the work with the customer. The rule-maker says anything stronger looked too much like price control.
The number is the regulator's own. The ACCC's December 2025 market monitoring report found customers on plans more than three years old pay on average 10.5 per cent, or $221 a year, more than customers on new plans; in NSW the gap is 13.3 per cent, or $303. The report calls it a "loyalty penalty" and notes it persists even after a year in which the gap narrowed, largely because prices on new-customer offers rose toward the old ones, not because old plans got cheaper.
The rule-maker had a fix drafted. The Australian Energy Market Commission's Pricing Review ("Electricity pricing for a consumer-driven future") proposed, in its 11 December 2025 draft report, a same-price-same-plan requirement: a retailer could not charge two customers on the same plan different prices for the same power. In its final report, published 18 June 2026, that rule is gone. In its place, under a recommendation the Commission titled "Shine a light on retailer behaviour that contributes to negative outcomes for loyal customers", retailers would instead have to notify customers who have been on the same plan for four years, and every year after, of the total they could have saved by switching; report to the Australian Energy Regulator how many customers are affected and how much they overpaid, with those numbers published; and make new market offers available to existing customers, not just new ones.
Why the Commission stepped back
The AEMC did not drop the rule because it decided the loyalty tax was acceptable. Its final report still calls the penalty a "material consumer detriment" that is "unlikely to dissipate without additional measures", and says it "still recommends addressing" it. It stepped back on the mechanism. Stakeholders, it records, were "split": there was broad acceptance that the loyalty tax is real, but disagreement on the harm, and concern that a same-price rule "could negatively impact competition and would reduce consumers['] need to engage with the market". The Commission's own conclusion was that a stronger measure "could ... be considered akin to price regulation and would have to be designed in such a way that wouldn't reduce incentives to switch". So it chose what it calls a "more targeted obligation" built on transparency, and left a door open: a scheduled review may recommend going further later, "such as requiring retailers to proactively move customers who are experiencing the loyalty tax onto better plans".
What nine consumer groups said back
The reaction landed the same day. Nine consumer and small-business organisations, Energy Consumers Australia, the Consumer Policy Research Centre, the Consumer Action Law Centre, Financial Counselling Australia, FCVic, COTA Australia, COSBOA, CHOICE and SACOSS, published a joint statement, "Loyalty tax inaction: A massive missed opportunity". Their argument is that the final recommendation "would require retailers to tell consumers how much more they are paying, instead of requiring retailers to give consumers a fair deal in the first place".
Energy Consumers Australia chief executive Dr Brendan French put the retail dynamic this way: "This is a massive missed opportunity. The loyalty tax is a trap that households, small business, and even retailers find themselves in. Just to keep their market share, retailers will offer unrealistic low prices, which they then need to hike up, often by 20% or more, within a year. What's worse, they fund these low prices by charging loyal customers more." The Consumer Action Law Centre's line was sharper on the mechanism itself: "Consumers don't need more information; they need a fair deal."
Disclosure is not nothing, but it has limits
The case for the lighter touch is not empty, and the ACCC's own data shows disclosure doing some work: 27 per cent of customers are now on their retailer's best offer, up from 19 per cent in 2024, a shift the ACCC partly attributes to the better-offer message retailers must already print on bills. But the same report shows the ceiling of a tell-them-and-hope mechanism: 36.5 per cent of market-offer customers, nearly 2.5 million households, still pay at or above the default offer, and a customer with a smart meter, solar and gas could face up to 233 plans when trying to switch in the Ausgrid network area. A notice tells you the door exists; it does not make the room any easier to cross.
Our read
The AEMC's caution is not a dodge. A same-price rule is a real intervention in how a competitive market prices, and the risk it named, that a hard rule could be gamed or could blunt the incentive to shop around, is a genuine one. But the gap the consumer groups point at is just as real: disclosure moves the effort onto the customer, and the households least likely to act on an annual notice, the older, the time-poor, the ones already in hardship, are precisely the ones the penalty falls on hardest. The most telling line in the whole exchange is the Commission's own recommendation title. It chose to "shine a light". Whether a light is enough is exactly what its own scheduled review is now set up to test, and it has reserved the stronger tool, moving loyal customers onto better plans automatically, for if the light does not work. The practical takeaway for a household has not changed and it is real money: the ACCC found customers who acted on the better-offer message were quoted an average saving of $291 a year from switching to their own retailer's cheaper plan. Until the rule does more, that lever is still yours to pull.
Sources
- Australian Energy Market Commission, The Pricing Review: Electricity pricing for a consumer-driven future, final report (PDF, 184 pp), 18 June 2026: the draft same-price recommendation, its removal, final Recommendation 1 ("Shine a light...") in full, and the Commission's stated rationale, all quoted verbatim from the report.
- Australian Competition and Consumer Commission, Inquiry into the National Electricity Market, December 2025 report (PDF), 22 December 2025: the $221 / 10.5 per cent and $303 / 13.3 per cent loyalty-penalty figures, the 36.5 per cent / 2.5 million at-or-above-default finding, the 27 per cent (up from 19) on best offer, the up-to-233-plans figure, and the $291 average better-offer saving.
- Energy Consumers Australia and eight other groups, Loyalty tax inaction: A massive missed opportunity, joint statement, 18 June 2026: the nine signatories, the "tell consumers how much more they are paying" framing, and the Dr Brendan French and Consumer Action Law Centre quotes, verified verbatim against the release.
- AEMC, Pricing Review landing page: final report published 18 June 2026, public forum 19 June.
Methodology. Secondary coverage disagreed on whether the final report kept or dropped the same-price rule, so the AEMC final report PDF was downloaded and read in full on 11 July 2026; it confirms the rule was dropped and supplies the Commission's own wording and rationale used here. The ACCC report was read in full for the figures. The consumer-group quotes were checked word for word against the ECA release before publishing. Price changes in the ACCC report are calculated at each regulator's default usage assumptions and exclude rebates, concessions and feed-in tariffs. The "Our read" section is our analysis, grounded in the sourced facts above and labelled as opinion.
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