What is bill smoothing in energy?

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According to 2024 data from the Australian Energy Regulator, 2.8% of Australian energy customers are in debt, with 1.7% of electricity and 1.2% of gas customers on hardship programs. With the cost of living increasing 4.0 – 6.9% in 2023, more Australians are looking at ways to stretch dollars and pinch pennies. In this article, Canstar Blue discusses ‘bill smoothing’ and how it can help to take the pressure off large annual bills.

What is bill smoothing?

Bill smoothing means paying smaller amounts on utility accounts more frequently, helping to manage bigger, annual bills. Bill smoothing gives the customer more control of their energy costs by spreading out, or ‘smoothing’ the estimated power costs throughout the year with small, regular installments. Some energy retailers can estimate annual power costs based on a customer’s previous energy usage, otherwise the retailer can estimate usage based on similar households. For example, if last year’s annual bill totaled $1,200, the energy provider might charge $100 each month for the next year.

Who is eligible for bill smoothing?

Bill smoothing is usually available for all customers however, energy retailers will typically suggest bill smoothing to those who struggle to pay bills on time. Customers might be able to access bill smoothing from the start of their contract, or could be placed on a bill smoothing program at a later time.

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Is bill smoothing beneficial?

Bill smoothing can be helpful as it makes energy costs more predictable and helps to reduce the impact of seasonal power usage, such as heaters in winter or air conditioners in summer. Knowing exactly what needs to be paid for electricity from one billing period to the next could help households better manage their budgets and reduce the stress that comes with large bills.

Things to be aware of

While bill smoothing helps to spread out the annual cost of energy, it could mean paying more at certain times throughout the year. However, customers will have lower bills at times of the year when they would normally expect to pay the most.

Another thing to be wary of is if energy usage is greater than anticipated, customers may be left with a large ‘settlement’ bill at the end of the year to account for the additional costs incurred. If annual energy usage was less than anticipated, account holders should be credited the difference on their next bill. It’s normal for energy retailers to send out regular bill smoothing ‘review’ emails to their customers to ensure usage remains consistent with annual predictions. Expect to receive an annual review notice at the end of the 12-month period to discuss a bill smoothing plan for the next year.

Note: different retailers will handle bill credit in different ways.

What is a payment holiday?

It’s common for retailers to allow for bill ‘payment holidays’ for customers on bill smoothing plans. This means taking a short break from paying energy bills (usually only one billing period at a time) in order to catch up on other expenses. Taking a payment holiday means the unpaid balance is simply absorbed, or ‘smoothed’, into the remainder of a customer’s annual bills.

Is there a downside to bill smoothing?

Be conscious of the price you’re paying for energy. Shop around and compare energy offers regularly to make sure you’re getting a good deal. Don’t just assume that your existing bill-smoothing payment plan is the best deal you can get.

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AGL bill smoothing

AGL allows bill smoothing on all of its energy products, giving customers the choice of weekly, fortnightly or monthly payment frequency. To be eligible for bill smoothing with AGL, customers cannot have more than $500 (GST incl.) of overdue debt with AGL on any AGL accounts and not currently be on any of AGL’s hardship programs.

AGL encourages customers to pay by direct debit, unless another payment method is approved first. AGL allows ‘payment holidays’, where customers can take a break from their bills, with the amount due smoothed over the remaining period of the 12-month term. Customers can take a month long payment holiday or four weekly breaks over the year.

AGL’s hardship program

For AGL customers who struggle to pay their bills, the retailer has a hardship program called ‘Staying Connected’. With this program, AGL says customers receive extra, personalised assistance that goes beyond traditional payment plans, helping customers resolve their problems and get back on track with their bills. This could involve asking customers to pay what they can afford and working with them to ensure they use power more efficiently.

‘Staying Connected’ is paramount to those customers struggling to make payments, failure to do so could result in energy being disconnected as a final resort.

• AGL customers having trouble paying their bills should contact the retailer on 131 245

Origin bill smoothing

Origin offers help for struggling customers, based on specific circumstances. Such as payment plans, spend controls, service limitations, temporary plan adjustments, personalised financial agreements and the potential waiver of late fees. As well as these options, Origin offers bill smoothing.

Origin’s bill smoothing program involves estimating a customer’s typical energy usage and providing a quote to reflect costs across the year. The potential downside is that customers may not use as much energy as predicted, meaning they have paid for something that was not used. Customers should note that Origin will provide further information regarding bill smoothing once an account has been opened.

Origin’s hardship program

Origin’s hardship program is called ‘Power On’. Origin says this program gives hardship customers access to information and payment-assistance options so they can get back on track with their bills. Origin promises to show empathy and sensitivity to those in financial difficulty, provide a payment plan solution and avoid disconnecting power or follow its normal debt collection process. But in return, Origin asks that customers maintain communication and work to reduce their debt.

Origin customers in financial hardship should contact the retailer on  1300 980 711.

EnergyAustralia bill smoothing

EnergyAustralia‘s bill smoothing option is called ‘Regular Pay’. It allows customers to divide their payments into smaller, more frequent installments based on estimated future charges. The amount is calculated by determining expected energy use over the term of a customer’s plan, including any outstanding balance, and then dividing this by the preferred payment frequency.

There are no setup or ongoing costs involved with Regular Pay. Customers can easily set up the feature in the EnergyAustralia MyAccount portal, or by calling 1800 171 397. EnergyAustralia will also review Regular Pay users’ accounts throughout the year to ensure they are not paying too much or too little for their energy compared to their actual usage.

EnergyAustralia’s hardship program

EnergyAustralia offers a range of options for customers needing assistance with paying energy bills, under its EnergyAssist program. Solutions offered include payment extensions, personalised installment plans and assistance with energy saving, as well as help with debt recovery and advice on accessing grants, rebates or discounts. EnergyAustralia can also put customers in touch with free financial counsellors in their area.

EnergyAustralia customers needing assistance can contact the retailer on 1800 558 643.

Red Energy bill smoothing

Red Energy offers a bill smoothing payment plan in the form of its ‘EvenPay’ program. EvenPay can provide some certainty with flexible payment options that put the customer in control. It allows customers to pay the same amount, on time, every time for energy in interest-free installments. Red Energy says that it provides this service by estimating energy usage over the course of a year. Customers have the choice of weekly, fortnightly or monthly payment options, but Red Energy insists that payments are made by direct debit.

Red Energy will review each customer’s account every six months to ensure the predicted energy usage and costs remain accurate. If not, changes can be made. Households interested in bill smoothing should contact Red Energy to discuss their eligibility for the program.

Red Energy’s hardship program

Red Energy encourages customers experiencing financial hardship to get in touch as soon as possible to discuss their options. The retailer promises that it will work with customers to make sure that whatever plan is set up is realistic and sustainable going forward. Red Energy also commits to providing energy efficiency advice to help customers better understand and manage their usage habits.

Red Energy customers having trouble paying their bills should contact the retailer on 131 806.

Other energy providers’ bill smoothing

Several other energy retailers offer similar bill smoothing plans, though some refer to them by different names and may undertake a credit check before a new customer can sign up.

You can check your credit score for free here

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The final word on bill smoothing

Bill smoothing can help customers manage their energy costs efficiently, with energy retailers such as AGL helping customers remove bill shock, especially around summer and winter. However, usage and supply costs can vary dramatically between retailers, so it’s important to thoroughly and regularly compare energy offers.

Bill smoothing plans could result in a final settlement figure at the end of the agreement, so pay close attention to energy usage over the course of the year and flag any concerns with your retailer immediately.

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