ENERGY companies in NSW are engaged in an aggressive price war, offering customers store gift vouchers, magazine subscriptions and seemingly big discounts off initial bills to entice them to switch retailers.

But consumer and welfare groups have warned that customers could be caught in the middle as at least 10 private power companies fight for market share following the full privatisation of the retail energy sector in NSW.

The Australian Competition and Consumer Commission confirmed this week it would target the energy retail sector and was investigating a ''number of complaints'' about the industry's door-to-door salesmen, as well as the conduct of energy comparator websites, particularly in relation to the savings consumers can make by switching retailers.

The head of campaigns at the consumer group Choice, Matt Levey, said consumers should do a careful investigation of energy deals before switching because the market rates offered by companies were often almost identical to the regulated rates.

He said consumers needed to pay close attention to the fine print, which could include fees for terminating a contract early, moving home or even establishing an account. A recent report for the St Vincent de Paul Society on NSW energy prices from July 2009 to July this year revealed that none of the electricity and gas market offers had published rates, not including discounts, that were lower than the regulated rate.

''In one plan considered by St Vincent de Paul's research, if you didn't pay your bill on time every month for a year, then you didn't get the discount offered and in fact, you would have been better off staying on the regulated tariff,'' Mr Levey said.

Ben Freund, the chief executive of the price comparison website GoSwitch, said at least 60 per cent of NSW households were on the most expensive default energy plan compared to as few as 35 per cent of Victorian households, where the market was one of the most competitive in the world.

The chairman of the ACCC, Rod Sims, told a forum hosted by welfare and consumer groups this week that he was concerned about the impact of misleading or deceptive conduct on vulnerable consumers, such as the elderly and those with limited understanding of English. ''Many energy companies offer large discounts to consumers … but it is often not clear from what base price the discount is occurring.''

The executive director of the Energy Retailers Association, Cameron O'Reilly, said the ''fierce'' competition in Victoria had shown retailers they could finally compete on a ''level playing field'' in NSW.

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