Why doesn’t iSelect list all energy retailers?

Posted by Adrian Merrick on 27/04/2019 12:01:00 PM
Adrian Merrick
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iSelect markets itself as an independent price comparison site. Last financial year, iSelect spent over $53 million marketing energy and selling it to customers. Should we therefore trust its scale to guide us to a better offer?

Some influential believe we have reason to be skeptical.

One of them is Rod Sims, the Chair of the Australian Consumer and Competition Commission (ACCC) that in April 2019 announced action would be taken against iSelect.

So, what does the ACCC accuse iSelect of doing?

They state that iSelect told customers using its website that they would benefit from a comparison of all available plans from its partner retailers in a specific location. During this period, iSelect also claimed that it would recommend the most competitive plan to consumers.

However, the ACCC claims that iSelect did not actually compare all available plans, and did not necessarily recommend the most competitive plan. Instead, it compared a limited number of plans based on the commercial arrangements it had with retailers. iSelect did not disclose this information to customers who used its service.

At the time of writing this article, iSelect listed 10 electricity retailers in NSW, 10 in Victoria, 8 in Queensland, 4 in ACT and 9 in South Australia.

That’s not a bad range to choose from — after all, you only need one retailer for your home’s or business’ power needs.

But do they compare the market?

Only partially. We checked the number of retailers that were listed in each of these regions on the two independent and free government comparison websites — Energy Made Easy for all states apart from Victoria, and Vic Compare for the AFL-mad state.

The results were startling. It turns out iSelect lists only 42% of the retailers that offer electricity tariffs in NSW and only 40% of those in Victoria.

State iSelect Independent Government
NSW 42% 100%
Victoria 40% 100%
Queensland 36% 100%
ACT 67% 100%
South Australia 47% 100%

If iSelect markets its proposition on being independent, why wouldn’t it back it up by listing all offers?

Money, of course.

Some energy retailers are desperate to grow customers and without having a great offer, they rely on third party channels to find customers for them. In effect, they ‘buy’ your business.

This isn’t a cheap way of operating. We’ve heard that many commercial price comparison sites charge these retailers up to $200 or more to sell them a single electricity customer. Got both electricity and gas? That could cost the retailer you’ve chosen a whopping $400 or more.

This isn’t free money, of course, and the retailers that use these sites aren’t paying price comparison sites to be charitable — they’re paying them because they know they can make at least that amount of profit — or more — in a short period of time to recover their costs. This means that things are likely to happen to their customers that will generate enough profit to more than cover the cost of the likes of iSelect.

If you choose to use a price comparison site, make sure you ask a few simple questions to check that your ‘money-saving switch’ won’t cost you more:

1. What percentage of retailers that operate in your state does the price comparison site list? If not 100%, why not?  
2. How much commission do they earn from retailers?
3. Do they promote certain retail offers over others in return for a higher commission?
4. What are the conditions of the prices or discounts they’re promoting?
5. If you submit your details and don’t complete the switch, how many times will they call you?

Regardless of their answers, we always recommend checking the two independent government comparison sites before taking a decision:

If you’re in NSW, QLD, SA or ACT: energymadeeasy.gov.au

If you’re in Victoria: viccompare.vic.gov.au

At Energy Locals, we don’t waste our customers’ money on price comparison sites that are out for themselves rather than customers. We’re proudly listed on the two Australian Government energy price comparison sites as well as a very small number of independent price comparison sites that operate in a very different way.

Posted by Adrian Merrick

Founder @ Energy Locals

Topics: how to choose energy provider

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