Will Electricity Discounts Become Illegal?
As we are becoming bewildered by the ever increasing costs of electricity, many of us have found that if we contact our electricity retailer, they will offer a discount. Will these electricity discounts become illegal?
A discount is only a saving if the original price, which the discount is based on, is an actual price or a generally accepted price (such as a previous price, an accepted recommended retail price, or competitor’s price) and complies with other conditions, such as being available for a reasonable period of time at the higher price.
On the ACCC (Australian Competition & Consumer Commission) website, under “Two-price comparison advertising”, it states that: ..… If a business offered a product for sale at a certain price before the sale, but rarely or never sold the product at that price, it should still exercise caution when deciding whether to use ‘was/now’ or ‘strike through’ pricing for this product…
Using the ‘was’ or ‘strike through’ price could be misleading, unless the business is able to show in some other way that the relevant consumers would have bought the product at the ‘was’ or ‘strike through’ price.….
The guidance above applies equally when a business uses a dollar or percentage amount (such as ‘60% off’) that a consumer will save if they purchase the product at the time the representation is made……. (Source: ACCC).
What happens if everyone contacts their retailer and negotiates an electricity discount? Will the higher price which is being discounted from may become invalid if no one is paying the higher price?
You can see the dilemma which is not isolated to just electricity retailers. I did note that when I rang up my electricity retailer for a discount, the discount was only applicable for 12 months. What will happen in 12 months, and if they are offering electricity discounts, what will be the price they are discounting from? Will anyone be paying the full price and will the electricity retailers have to make an appointment with their legal advisors to see if their discounting policy is legal?
Added to this is our PM, Malcolm Turnbull, recently met with the retailers and received confirmation that the electricity retailers would write to their customers who were paying the higher price and let them know that there were electricity discounts available. They might be hoping that a reasonable number of these letters get lost in the mail.
Discounting of course is not illegal, however the discount has to be based on a realistic higher amount and follow many guideline available at the ACCC. Businesses should take a great deal of care and keep meticulous records if they are offering discounts.