Electricity discounts don’t necessarily lead to cheaper bills, an Essential Services Commission report has found.

The quarterly Victorian Energy Market Update, covering January to March and released on Thursday, said big discounts were often “meaningless” and “confusing”.

The average discount offered has risen to 33 per cent, up from 29 per cent last July.

“When a 40 per cent discount from one retailer can result in an annual bill that is about the same as a bill with no discount from another retailer, it’s clear the market has a problem,” commission chair Ron Ben-David said on Thursday.

Discounts were often conditional on the household paying on time, meaning those in financial difficulty could end up paying $400 or $500 more a year if they don’t pay on time.

The report also found disconnections due to non-payment were 11 per cent higher in the quarter to March. However, it followed a sharp decrease in disconnections by large retailers in the previous quarter.

But annual disconnections were 22 per cent higher than at the same time the year prior.

“Since July 2017, there were a cumulative total of 39,544 disconnections of customers for not paying their energy bills, which is 22 per cent higher than July 2016 to March 2017.”

Customers can only be cut off after their retailer follows strict procedures. A higher threshold to disconnect customers will come into effect from Sunday.

Victorian customers struggling to pay their bills will be able to access more comprehensive assistance from retailers from January, including arrangements to pay their bills or debt.

Mr Ben-David said there were signs retailers were stepping in earlier to help customers having difficulties, by allowing them more time on payment plans.

“More customers with large debts are being put on more realistic payment plans,” he said.

Coalition energy spokesperson David Southwick said the rise in disconnections was the result of “Labor’s energy affordability crisis”.

“It is totally unacceptable that in this day and age in Victoria we have people on stretched household budgets having to do without heating in winter because they can no longer afford it.”

From July 1, the state government will hand out $50 rebates to households that use its energy price comparison website.

The New Daily contacted Energy Minister Lily D’Ambrosio.