We’ve spent plenty of time explaining the "loyalty tax" - that frustrating pattern where an energy retailer wins you over with a killer introductory rate, then raises your price once you've settled in and stopped checking.
The Australian Competition and Consumer Commission (ACCC) put a concrete number on this behavior in late 2025. Their data revealed that households on an energy plan more than three years old were paying an average of $221 more per year than customers on newer plans. In South Australia, that loyalty penalty jumped to as much as $408.
Now, one state has stepped in to stop it. As of 1 July 2026, Victoria became the first jurisdiction in Australia to ban the energy retailer loyalty tax outright.
How the Victorian ban works
The new regulations were introduced by Victoria's independent regulator, the Essential Services Commission (ESC), via amendments to the state's Energy Retail Code of Practice.
- The four-year trigger: Retailers must automatically identify customers who have been on the same plan for more than four years.
- The price check: Retailers are required to assess whether these customers are still paying a fair rate by comparing their plan against current market offers and the Victorian Default Offer (VDO).
- The automatic switch: If the customer is being overcharged, the retailer must proactively transition them to a cheaper plan.
Companies have until 30 June 2027 to transition all affected customers, facing steep penalties of up to $244,212 per breach if they fail to comply. However, Victorians don't have to wait. Anyone on an older plan can contact their provider right now to demand an immediate switch.
The Victorian Government projects that between 27,000 and 53,000 households will benefit, pocketing up to $258 a year each, resulting in a collective savings of roughly $12.2 million.
Announcing the policy, Victorian Energy Minister Lily D'Ambrosio said:
"We can't let private energy companies prey on vulnerable people. We're ending the energy retailer loyalty tax and putting money back into people's pockets."
The ESC’s own market analysis backs this urgency. Their data showed that Victorians who stayed on the same plan for just two years could save up to $410 annually by switching to their provider's cheapest rate. For those who hadn't touched their plan in a decade, that missed savings skyrocketed to $950 a year.
Why the national regulator backed down
Victoria's aggressive stance stands out because the national rule maker explicitly looked at a federal loyalty tax ban and chose a softer path
A nationwide ban was originally on the table as one of six key proposals in the Australian Energy Market Commission's (AEMC) draft report on energy pricing reforms. Yet, by the time the final determination was released, the ban had been watered down into a "sunlight test."
Instead of forcing retailers to fix the issue, the AEMC simply requires them to notify customers on four-year-old plans exactly how much extra they paid compared to the retailer's best offer. This data must also be reported to the Australian Energy Regulator (AER).
Essentially, retailers in the rest of Australia just have to confess that they are overcharging you. Fixing it remains your responsibility. Consumer advocates have rightly criticised this as a missed opportunity.
History shows that transparency alone doesn't change behavior; Victorian retailers have been legally forced to print "best offer" alerts on bills for years, yet the loyalty tax continued to thrive. Because Victoria regulates its own retail market independently, it had the freedom to bypass the AEMC's compromise and implement a hard ban.
What the rest of the country gets instead
While a national loyalty tax ban is off the table, the federal government has introduced separate guardrails. Federal Energy Minister Chris Bowen recently announced a package of national rule changes designed to make electricity bills fairer across the National Electricity Market (NEM).
Effective 1 July 2026, these rules establish several basic consumer protections:
- Rate stability: Retailers can only raise prices once a year.
- Standing offer caps: Providers cannot charge more than the standard safety-net price once an introductory discount or contract expires.
- Fee restrictions: Excessive late payment fees are banned, and every customer must be offered at least one fee-free payment option.
- Hardship support: Expanded protections for vulnerable customers will take effect on 30 December 2026.
While these measures slow down the worst habits of traditional retailers, they don't solve the core problem. The federal rules cap your prices at the standing offer once your honeymoon rate ends. But the standing offer is the ceiling of the market, meaning it is rarely a competitive deal. Under national rules, a retailer can still quietly leave you on the most expensive legally allowable plan. In Victoria, they are forced to give you a better one.
Why a ban only treats the symptom
This reform will put real money back into the pockets of people who don't have the time or ability to constantly shop around, such as busy families, older citizens, and people who assumed their provider wouldn't penalise them for staying loyal.
However, the policy has clear limitations:
- It stops at the Victorian border: If you live in NSW, Queensland, or South Australia, your retailer has zero obligation to move you off a stagnant, uncompetitive plan.
- The four-year window is long: A plan can still steadily worsen during years one, two, and three, provided it stays marginally aligned with the default safety-net benchmark.
- It leaves the traditional business model intact: The loyalty tax isn't an accident; it's a feature of how traditional energy companies make money. When a company buys wholesale electricity, marks it up, and sells it to you, their profits grow when that markup widens. Silently raising prices on customers who aren't paying attention is simply that business model working as intended. Victoria has outlawed the most extreme version of this practice, but the underlying incentive remains.
At Amber, there is nothing to ban
It says a lot about the current state of the energy sector that regulators have to threaten companies with six-figure fines just to get them to treat long-term customers fairly.
Amber has never needed these regulations because our business model makes a loyalty tax impossible.
We pass through the actual wholesale price of energy with absolutely no markup. Instead, we charge a flat, transparent monthly subscription. That subscription fee is exactly the same for everyone on the plan, whether you signed up this morning or five years ago. There are no introductory rates that expire, no hidden price tiers, and no penalties for not checking your bill every month.
Victoria’s new rules force traditional retailers to check once a year whether they are taking advantage of you. At Amber, our model ensures there is nothing to check in the first place.
Wherever you are in the country, you don't need to wait for a regulator to get you a fairer deal. There's already one on the table. See what you'd pay with Amber.
