The past two months have seen a lot of different discounts come and go from the market. This month’s offers aren’t as good as last month.
But why is this? And how can you make sure you’re not paying a cent more for energy than you need to?
- Wholesale electricity costs are up, so that means retailers have a lot less leeway to offer discounts.
- The Default Market Offer (DMO) or Victorian Default Offer (VDO) – a sort of price ceiling for consumers – has been lowered in some areas. Again, that means less opportunity for retailers to offer healthy discounts.
- Energy providers are involved in “wholesale hedging”. This means they’ll lock in a price with wholesalers as much as two years in advance. If they’ve managed to get a good price, it gives them a little more leeway to offer great discounts.
- This also means there’s a good chance you’re now on a different price to the plan you signed up on. Potentially a more expensive one.
What exactly is wholesale hedging?
This is something many of the larger electricity retailers are involved in. They typically buy electricity from wholesale suppliers two years in advance. This locks in the price and allows them to offer deals, even if the discounts aren’t always as good as previous years.
So, is it possible for Australians to still save on electricity bills?
The short answer is yes: energy companies still want your business. But it means you need to be smart about spotting a good offer.
Should you continue to compare electricity deals?
The easy answer is yes, absolutely. If you’ve not compared energy plans in over a year or even if you just feel your bills are getting a bit expensive, that probably means it’s time to shop around.
Any deal that says it’s a lot less than the reference price may well be better than the plan you’re on. But you’ll need to do a bit of work here to work out if it’s cheaper or not.
The information you need will be on your energy bill. Take a look at our guide to understanding your bill.
You can then either do a bit of comparison yourself or use a specialist service like Compare Club that allows you to upload your bill and the experts can quickly compare prices against the panel.
What if you don’t compare electricity deals?
If you haven’t negotiated a ‘market offer’ (a deal or discount), you’re likely to be on what’s called a DMO (in NSW, south-east Queensland and South Australia) or VDO (in Victoria).
Each year the energy regulator sets a reference price on 1 July which is essentially the maximum an electricity retailer can charge a customer on a default contract. This type of contract just rolls over with the retailer’s new pricing and there’s no action required by you.
If you’re on default contract it’s probably because you:
- are loyal to your existing supplier
- don’t look for a better deal as you’re:
- unsure how to or feel it’s too complicated
- time-poor and haven’t got around to it
- simply unaware that you can compare deals
- are okay to roll with whatever your supplier dictates.
Be aware: If you have negotiated a market offer you could still end up paying more than the DMO or VDO. Most market offers have what’s known as a benefit period. This is usually the offer you signed up to, which typically lasts 12 months. After this period, your retailer could put you on a more expensive plan unless you renegotiate with them or switch.
What about the government rebates?
The federal government is giving each household a $300 rebate towards energy bills which will be paid quarterly.
- We’re currently waiting for more information on how this rebate will be rolled out.
- It’s likely that the credit would be linked to each household via your energy meter (also known as a National Meter Identifier).
- If you switch retailers it will still be applied (fingers crossed) with no hiccups.
The national $300 rebate is more than what was offered last year to NSW and Victorian residents, being $250. And unlike last year you won’t need to apply for the rebate.
How does the newly announced Cost of Living Rebate in Queensland work?
If you’re in the Sunshine State your household may be entitled to a $1000 rebate on your electricity bills. It’s known as the Queensland Government Cost of Living Rebate and eligible customers will automatically be credited so there’s no need to apply.
If you want to compare and switch deals, you can still do so even if the rebate leaves your account in credit. Any leftover credit will be refunded in the transfer process.
Concession card holders, seniors and pensioners can also receive a $372 Queensland Electricity Rebate which is applied each quarter.
While the $300 rebate for every Australian household may provide some financial relief, with wholesale electricity prices going up, there’s a fair chance the rebate is being absorbed in the hike, so it’s not really helping too much.
Unless you’re vigilant and compare your electricity on a regular basis, chances are you’re not on the best deal and you’re probably paying more than you should.
And – let’s be honest – for a simple utility we all use, the industry makes it unnecessarily hard to figure out if you’re actually on a plan that’s good value for money.
Don’t have time to check you’re on a good value electricity deal? The experts at Compare Club can do the comparison for you.
How have your power bills been recently? When was the last time you compared electricity providers? Let us know in the comments section below.
Also read: Energy-saving tips for winter
