The energy market’s dirty little secret: how comparison websites make money

The energy market’s dirty little secret: how comparison websites make money

Let’s set the scene:

You open up your latest electricity bill and stare at it in disbelief…is this a joke? You can’t help but laugh. The dollar figure smiling up at you is an absolute whopper!

You try to do some quick assessments of what’s happened over the last three months that could have caused this. Did I start a laundry business, a neon light showroom, an aluminium smelter? No, don’t be crazy, nothing’s changed. This is surely a mistake, surely. I’ll call the retailer. They’ll fix this. Oh, no, it turns out they won’t. This is my bill. I need to pay this, or they’ll turn the power off. Hmm.

Well, have it your way, but this is the last time those thieves get a cent out of me! I’m switching provider. Don’t try and stop me. I’m going to assess the pros and cons of every retailer, their every plan. I already told you, don’t try and stop me!

Cut forward 20 seconds:

This is so confusing. I don’t know what’s what. Who designed this electricity system anyway? It’s ridiculous. I know, I’ll just jump on one of those comparison websites. They’re always advertising about how good they are at finding the best deals. They’ll sort me out. They seem like real straight shooters…

Before you go any further, imagine you knew the truth about these comparison websites. Well, let’s get to the bottom of how this all works right now:

When you choose a retailer via a comparison website, the comparison website charges the retailer a fee.

This can be as much as $200! This is a significant amount, which obviously eats into the retailer’s profit margins, and forces the retailer to build this fee into the costs of all retail plans.

In November 2019, The Australian Competition and Consumer Commission (ACCC) identified these costs as third-party sales costs, which made up 24-33% of retailers’ customer acquisition and retention costs.

*All consumers pay for these commission costs which are embedded in every electricity bill. How much is this? Huglo estimate that these costs are approximately $110 million per year.

Commercial comparison websites don't always compare all retailers in your region.

They will only assess the retailers that have agreed to pay them a fee. On average, 39% of retailers are “compared” while the worst comparison websites “compared” only 13% of all available retail plans in the market! While some commercial comparison websites are clearly better than others, all of these sites do receive some form of commercial fee for service.

We don't make this stuff up. This is the way the electricity market operates. This is how comparison websites make money.  

Our aim at Huglo is simple; to secure our members the best value deal on energy possible. These deals exist because we’ve developed technology that can assess every retailer, not 39% or 13% but every single one.

We’re doing this with full transparency and to the benefit our members because we see a future where the Huglo Community drives electricity costs lower and lower, achieving the ultimate goal of giving power back to the people.

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