I’m Joe from Smarta Switch, in Brisbane. Here’s a pattern I see almost every week: a business owner gets a renewal letter, it shows a “discount” off some reference rate, it feels like the retailer’s looking after them, and they sign. Then I look at the bill and the renewal is sitting 10–20% above what the same retailer is quoting brand-new customers down the road.
It’s not a scam, exactly. It’s just how the renewal game is played. Once you see the trick, you stop falling for it. Let me show you.
We’re paid by the energy retailer when you switch, never by you.
The uncomfortable truth: a renewal is the one quote you probably won’t check
Retailers know their own data. They know that most business customers, especially busy owner-operators, don’t shop their renewal. They accept it because it arrives looking official, it mentions a discount, and chasing alternatives is a job nobody has time for.
So the renewal offer is priced for exactly that behaviour. It has to look reasonable enough that you sign without flinching, but it doesn’t have to be their sharpest number, because their sharpest number is reserved for winning new customers. You’re already in the door. The incentive to fight for you is gone.
That’s the whole mechanism. Acquisition rates win customers. Renewal rates milk them.
The anchoring trick in the letter
Look closely at how a renewal offer is worded and you’ll usually find the same move: a discount off a reference rate. “20% off our standard rate.” “A loyalty discount applied.”
Here’s the problem. The “standard rate” or “reference rate” is one the retailer sets themselves, and it’s deliberately high. A big discount off a high number can still leave you above market. You’re being anchored to their inflated reference point instead of to what the energy actually costs today.
The number that matters is never the discount percentage. It’s the final cents per kWh, the daily supply charge, and the demand rate if you have one, compared against what other retailers will quote you right now. A “30% discount” that lands at a high c/kWh is worse than a “10% discount” that lands low. The percentage is theatre.
Ignore the discount. Read the rate. A renewal is only good if its actual c/kWh, supply charge and demand rate beat what the market will quote you today, full stop.
Why “loyalty” works against you in energy
In most industries, being a long-standing customer earns you goodwill. In energy retail it often does the opposite, because your loyalty is itself the signal that you don’t shop around. The longer you’ve stayed without switching, the more confident the retailer is that you’ll accept the renewal. So the “loyalty offer” can quietly be among their least competitive.
This is the same dynamic behind insurance and broadband renewals. Energy just hides it better, because the bill is more complicated and most owners can’t easily tell a good rate from a bad one at a glance. (Here’s how to read every line of a commercial bill.)
”But I’m on a fixed contract, surely the renewal is fair?”
Two separate things people mix up:
- A fixed contract locks your rates during the term. That part’s fine.
- The renewal offer is a brand-new contract for the next term, and it’s priced fresh, against current market conditions and against the retailer’s read of how likely you are to leave.
So a great fixed deal three years ago tells you nothing about whether this renewal is good. They’re unrelated quotes. The renewal deserves the same scrutiny as a first-time switch. (Fixed vs variable, explained.)
And if you do nothing at all, you don’t even get the renewal rate, you roll onto the out-of-contract or default rate, which is dearer again. That’s the worst seat in the house. (Why that rollover is the most common reason bills creep up.)
How to test your renewal offer in 10 minutes
You don’t need a broker to sanity-check it. Do this:
- Find the final numbers, not the discount. Pull out the c/kWh (peak/shoulder/off-peak if you’re on time-of-use), the daily supply charge, and any demand rate.
- Get one competing quote from another retailer for the same site and usage. Even the government’s Energy Made Easy tools give you a reference point.
- Compare the rates, not the percentages. If your renewal’s actual rates are higher than the competing quote, the “discount” is window dressing.
- Check the term and exit fees. A slightly better rate locked for too long, or wrapped in a stiff exit fee, can be worse than a plainer deal.
If the renewal genuinely beats the market, accept it, some do, and good on your retailer. But test it first. Never sign a renewal blind.
When a renewal offer is worth taking
To be fair to retailers, not every renewal is a stitch-up:
- Volatile market periods. When wholesale prices have spiked, a renewal locked in earlier can be better than anything new on offer. Timing matters.
- You’ve got pull and used it. If you (or a broker) went back and said “this is above market, here’s a competing quote,” retailers will often sharpen the renewal to keep you. They have room, they just don’t lead with it.
- A genuinely competitive retailer. Some do price renewals fairly to keep churn down. They exist. You just can’t assume yours is one without checking.
The point isn’t “renewals are always bad.” It’s “renewals are never to be trusted on sight.”
What to do this week
- Dig out your renewal letter and your current bill. Write down the actual rates, not the discount.
- Note your contract end date. The sweet spot to act is 30–90 days out, early enough to switch cleanly, late enough to quote against current prices. (The 90-day renewal checklist.)
- Get it tested against the market. Upload your bill and renewal offer on this page, or email hello@smartaswitch.com.au. I’ll tell you, straight, whether your renewal is genuinely competitive or quietly above market, and what it should cost. Usually back the same day. No cost, no commitment, because we’re paid by the energy retailer when you switch, never by you.
The renewal letter is designed to be signed without thinking. Thinking about it for ten minutes is, reliably, one of the best-paid ten minutes you’ll spend on the business all year.
Joe Lawrence, Co-founder, Smarta Switch Australia 0435 642 592 · joe@smartaswitch.com.au