An electricity plan is a contract between you and your electricity retailer that stipulates the prices, discounts and conditions of the supply of electricity to your home or business. Most electricity retailers offer customers a handful of deals made up of both standard and market offer contracts, which vary from state to state. You will find open contracts (with no fixed term) and contracts for one or two years.
Most electricity retailers let customers sign up online. Simply visit your preferred provider’s website and carefully consider what they have on offer – be sure to read the Electricity Price Factsheet to know exactly what you’ll be paying. Once you have found yourself a good deal, just follow the website’s instructions to sign up. Customer review and comparison websites such as Canstar Blue can also help in the decision-making process. If you’re changing your plan, but not the retailer, then there is nothing else you need to do. If you are switching companies or signing up for power for the first time, you will need to provide your NMI (If known), address and bank details. After that, pick a connection date and a meter technician will come out to seamlessly complete the connection.
Electricity prices are set by either your energy retailer or your state government depending on if you live in an area with price regulations or not. In most cases, the energy companies are free to set their own prices, but in many rural area prices are still regulated, meaning they are set by the local government. Households in Sydney, Brisbane, Adelaide and Melbourne will have their prices set by the energy retailers, but in Western Australia and rural Queensland, for example, prices remain regulated.
Electricity usage rates are largely controlled by the market forces of supply and demand. Retailers purchase electricity at a wholesale rate from the National Electricity Market before on selling it to customers. The wholesale prices will change every five minutes depending on the demand for electricity. Supply charges, meanwhile are determined by network distributors to fund network infrastructure maintenance and improvements. As well as market forces, prices are also set by retailers. In addition to usage and supply costs, your bill will also be made up of charges for your retailer’s service, as well as government GST.
Energy retailers typically submit their applications for rate changes to the Australian Energy Regulator every 12 months. In South Australia, New South Wales and Queensland, prices are usually reviewed in July, but in Victoria prices will change in January. However, it should be noted that electricity costs can change during the year if your provider amends its rates or discounts.
A deregulated market means that energy retailers are free to set their own rates and offers under a relaxed regulatory environment. Previously, prices were set by state governments. Deregulation has opened the door to new electricity providers and increased competition, although the merits of price deregulation are still hotly contested. Victoria, Queensland, New South Wales and South Australia all have price deregulation, but in some rural parts of these states, plus in Tasmania and Western Australia, the price of electricity is still set by the local government.
Electricity market retail contracts are energy plans designed by specific energy retailers. These are almost always cheaper than the alternative standard retail contracts that are also offered, and are likely to include discounts, incentives and bonuses for customers. The main downside to market offers is that your retailer can change the prices you’re charged at any time, unless it is a fixed rate plan. The majority of these offers come with variables rates. Not all households in Australia will have access to market retail offers.
Standard retail electricity contracts are plans with the terms and prices set by a state government. Retailers in deregulated electricity markets must provide a standard retail contract by law as a default option for customers who have yet to switch to a market offer contract. Standard retailer contracts have fixed prices for six month intervals, however the rates are generally higher than those of market retail offers and there are no discounts available. As such, standard offers are more expensive and are not intended as a viable alternative to market contracts.
A variable rate electricity plan means the amount you are charged for power usage or supply can change at your energy retailer’s discretion. The majority of retail market contracts have variable rates, which are typically reviewed every 12 months. Variable rate electricity plans are usually available on one or two-year contracts, but some providers do offer open contracts. Exit fees will often apply if you cancel the agreement. Variable rate plans generally provide the best value, but you must be sure to regularly review your options as charges and discounts change.
A fixed rate electricity plan means the amount that you are charged for energy usage and supply will not be changed during the term of your agreement. While prices on variable rate plans will change every year, fixed rate plans provide some certainty over the rates you will pay for electricity. However, your electricity bills will still fluctuate depending on your usage habits. Fixed rate plans are only available on two-year contracts, meaning that you will be protected from any rate increases over that period. Only a handful of energy providers offer fixed rate plans, including AGL, Origin, EnergyAustralia and Red Energy.
A fixed cost electricity plan means you know exactly what you will be paying for power every billing period, regardless of your energy usage. Fixed cost plans are currently only offered by two retailers – Origin Energy and Sumo Power – although more are likely to follow suit. Fixed cost plans provide the most certainty over your electricity costs, with the amount you are charged based on your previous usage history. The fixed amount is what you will pay each billing period, but this will be reviewed every 12 months.
Many retailers offer business and residential customers the option to have some or all of their energy consumption reimbursed to the electricity grid from renewable energy sources. GreenPower plans are usually offered with 25%, 50%, 75% or 100% renewable generation. GreenPower plans involve paying a few cents extra per kWh, potentially making it rather expensive.
Electricity usage charges are what you pay for each kWh of electricity your household consumes – the more electricity you use, the more you will pay. Usage charges generally cost around 20c/kWh to 30c/kWh, but prices vary between states and depending on your provider. Usage charges will be the most costly element of your electricity bill, so it’s very important to understand what rate you are paying and whether you could find a lower rate with a different supplier.
An electricity supply charge is a cost incurred for remaining connected to an energy network. Supply charges vary considerably from state to state, generally ranging in costs from 80c to $1.50 each day. Even if you don’t use any power, you will still need to pay the supply charge. Despite supply costs being a charge imposed by energy distributors, the rates will vary from retailer to retailer. As supply charges can heavily contribute to your bill, it’s important you check the energy price factsheet.
A kilowatt hour (or kWh, as it is more commonly expressed) is a unit of measurement used for measuring electricity usage for billing purposes. Simply put, a kilowatt (kW) is a measurement of how much electricity an appliance demands in order to operate, while a kWh is the number of kilowatts that your household consumes over a period of time.
The average Australian household uses 17.3kWh of electricity per day, according to research published by the Australian Energy Regulator. Energy consumption will vary depending on the season, the number of people in a household, and the types of appliances used. Bearing in mind that the AER’s research excludes households with swimming pools, its publication claims that we use the least amount of electricity in summer, while the winter months see us considerably increase our energy consumption, as the table below shows: The following table shows average daily electricity consumption (kWh).
|Household size||1 person||2 people||3 people||4 people||5 people|
These results are based on average households, so consider that if you have more than five people living with you, your energy consumption will reflect this.
Electricity tariffs refer to the pricing structure of your electricity usage charges. Depending on your tariff, you may be charged different rates depending on when, or how, you use electricity. Electricity tariffs can vary between energy retailers, but the most common electricity tariffs are:
The tariff available to you depends on your meter type. Old meters will usually be on single rate tariffs, while newer meters can take a number of usage measurements for multi-tariff rates.
A single rate tariff means you are charged the same rate for all of your electricity usage regardless of the time of day, what you are powering, or how much energy your household has consumed. Single rate tariffs will typically result in the highest bills. This type of tariff has fallen out of fashion in recent years as more modern electricity meters, such as smart meters, have given more homes and businesses access to time of use tariffs or other tariffs that could help reduce costs.
Certain high energy consumption appliances such as hot water systems, pool pumps and refrigerators may be connected on a dedicated circuit and metered separately from the rest of your electricity consumption. Electricity retailers can charge a considerably lower usage rate for the dedicated appliance, potentially helping to reduce your energy bill. A controlled load is not exclusive and can be combined with a time of use, two-rate, block or single rate tariff.
A block electricity rate means a different rate is charged for each ‘block’ of electricity usage. A block may be a certain amount of kilowatt hours (kWh) per day, or per billing period. To illustrate this, take the artificial example below:
This means that two separate usage rates are charged for ‘peak’ and ‘off-peak’ periods. As electricity is considerably cheaper during off-peak hours – because of decreased demand – it is a good option for those who use most of their electricity during the day.
A time of use tariff means you are charged three separate electricity usage rates for either ‘peak’, ‘off-peak’ or ‘shoulder’ periods. This is a common tariff structure for households with smart meters installed.
A ‘peak rate’ is charged during periods where there is a high demand for electricity usage. Peak usage rates are generally applied from 3pm to 9pm and are considerably higher than those charged in off-peak or shoulder periods.
An ‘off-peak rate’ is charged during periods of reduced energy usage. Off-peak electricity rates generally apply from 11pm through to 7am and are much cheaper than shoulder or peak period rates.
A ‘shoulder rate’ is a rate charged between peak and off-peak periods when there is a mild demand for electricity. Shoulder rates usually apply from 9pm to 11pm and 7am to 3pm. Shoulder rates are more expensive than off-peak periods and cheaper than peak periods.
Discounts are a percentage deduction made from your electricity costs at the end of each billing period. Energy discounts are only available on market retail contracts, and the amount you are discounted – if at all – will vary across different plans and electricity companies. Discounts you might commonly encounter include:
The discount amount, which can vary from as low as 2% up to 40% or more, will usually be taken off your electricity usage costs. However, some providers have discounts off your entire bill instead. Be aware that not all high-discount plans work out the cheapest overall options as some of the contracts with the highest discounts will also include the highest usage or supply charges, which can negate the overall savings. Failing to meet the conditions of your discount could also mean you are charged a fee. Also keep in mind that energy discounts have benefit periods and can expire.
A pay on time discount means you will receive a set percentage off your electricity costs at the end of the billing period – provided that you settle your bill on or before the due date. Pay on time discounts are the most common form of energy discount, but the amount you receive off your bill can vary considerably. This will depend on your energy retailer and the plan you are on. Pay on time discounts can be off your entire bill or just usage charges.
By having your electricity bill automatically debited from your selected bank account – rather than making manual payments every time – you could be eligible for a direct debit discount. It’s a simple and effective way to save money for those who are comfortable with direct debiting. A direct debit discount could be off your entire bill or just usage charges.
What is a bundled energy discount?
If your home or business uses natural gas provided through the same retailer as your electricity, you may be eligible for a ‘bundled’ discount. This discount can vary considerably across retailers from 2% to 15%. The discount could be off your whole bill or just usage charges. Like with other discounts, there will likely be a benefit period which could expire after one or two years.
Discounts are offered by the energy retailers for anything that makes their lives a little easier, or just saves them money. This is the case with email billing discounts. If you receive your bills by email instead of post, energy providers will often give you a modest discount as reward. This will also mean receiving all other communications via email instead of post.
A discount benefit period is the length of time that your energy discount will apply. In most cases, benefit periods last for 12 months, although some electricity retailers offer discounts over two years, or even ongoing. Once the benefit period ends, you will likely have to start paying the full, non-discounted rate for power, which could be considerably more. It’s best to treat big-discount electricity plans as introductory offers and review your options at the end of the benefit period.
Each state and territory provides a number of government-mandated concessions designed to assist households experiencing hardship that affects electricity consumption or THEIR ability to pay their bills. Depending on the type of government concession or rebate, customers may be required to hold one of the following:
The names and availability of assistance schemes will vary across states, but they generally include:
Emergency relief assistance: Customers who are at risk of being disconnected due to a legitimate inability to pay their utility bill may be eligible to receive a one-off imbursement. This can only be applied every 12 or 24 months depending on your state.
Medical Energy rebate: Customers who require energy-consuming medical equipment or must regularly use heating or cooling appliances for medical purposes may receive an annual rebate of around $200. Some states such as Victoria instead supply a reasonable discount on your energy bill.
Other rebates, concessions and discounts: Depending on your state, several other assistance programs may be available to you if you are:
If you are unable to pay your electricity bill on time, your retailer is required by federal law to follow certain steps. You will not be automatically disconnected, however you may lose any discounts you might have been eligible for.
Disconnecting a property for late payment is a drastic action which retailers do their best to avoid. If you think you may struggle to pay your bill on time, contact your energy retailer to discuss a possible extension, or payment scheme.
Bill smoothing is a payment scheme in which customers can pay fixed monthly, fortnightly or weekly instalments towards their expected electricity bill. Your retailer will forecast your annual electricity consumption, given your history, to see how much you should be paying. Incorrect estimates will be settled in later bills. Bill smoothing is a great option for those who like a predictable budget. The idea behind paying the same amount each billing cycle is that you won’t be taken by surprise in peak energy usage seasons.
Smart meters are electricity meters that provide energy usage information every half hour, allowing households and businesses to more closely monitor usage through apps and web portals, as well as benefit from flexible pricing tariffs. Smart meters are installed in most Victorian homes and are becoming increasingly common in New South Wales, South Australia and Tasmania. Some energy providers, such as Powershop, have built their business models around the use of smart meters. It is recommended that customers monitor their electricity usage through their smart meter to become better informed about their usage habits, which could result in reduced costs.
The National Meter Identifier (or ‘NMI’ as it’s displayed on your bill) is a unique 10 digit number used to identify your electricity meter. It allows your electricity retailer and network distributor to identify your meter for purposes of connection, metering and billing.
If a meter reader is unable to access your electricity meter (e.g. due to an aggressive dog), then the distributor will estimate your energy usage based on previous records and your retailer will charge you accordingly. If this is the case, an ‘E’ will be displayed next to your usage figure on your bill. If it is later learned that this was an incorrect estimate, you will be charged more or less accordingly in your next bill. This is not a problem for households with smart meters, as electricity usage data is automatically transferred to the network distributor.
An electricity distributor owns and maintains all of the infrastructure within a certain area that is associated with delivering power to homes and businesses, including poles, wires and meters. Your local distributor is responsible for recording your energy usage and passes the details to your electricity retailer for billing. While you have no choice over who your distributor is, they have a big impact on your overall energy costs because they set supply charges. Usage costs could also vary depending on location.
The NEM is an acronym for the National Electricity Market. It is a large electricity distribution network made up of the several smaller energy networks that span most of Queensland, New South Wales, Victoria, South Australia and Tasmania. The electricity generators produce the electricity for the NEM before electricity retailers purchase it at a wholesale rate to resell to customers.
Most energy companies let you switch online in a process that takes just a matter of minutes. Before you do this however, make sure you’re not locked into a minimum term contract with your existing provider, because if you are, then a cancellation or exit fee may need to be paid. If you are in an open term contract, it is not necessary to inform your current provider that you are leaving – your new energy company will handle that for you. To switch to a new electricity company, you will usually have to provide the following information:
Once this is done, your local distributor will take a meter reading for your final bill with your old provider and to start a fresh billing cycle.
If you find a more favourable plan from another electricity provider, then there is never a bad time to switch, provided you are not locked into a contract and would need to pay an exit fee. Generally, it’s worth reviewing your options every time your retailer changes its pricing as you may end up paying more if you stay put. You should also compare other plans when the benefit period of your current discount expires, because once again you could see your costs increase. Electricity prices tend to be reviewed in January and July, so make a note in your diary to review your options.
New South Wales has about 20 different electricity retailers to choose from, including all the established energy giants and several new providers you may not have heard of. The following providers all operate in NSW:
Victoria is a high-profile market for electricity retailers, meaning there are plenty of companies vying for your business with competitive deals. The most notable retailers in Victoria include:
South Australia has comparatively fewer options than other states when it comes to electricity retailers. South Australian electricity retailers include:
Queensland has only recently deregulated its electricity pricing, so new energy retailers are likely to join the market in the coming years. For now, however, the following electricity providers operate in South East Queensland:
Customers in the ACT have a very similar list of options to that of NSW. Meanwhile, residents in Western Australia, Tasmania and the Northern Territory have either very limited or no choice as to who they can purchase electricity through.
There are no costs for switching providers, nor do electricity retailers charge a sign-up fee. That said, if you are in a minimum-term contract, there may be early termination fees for switching. Fortunately these fees are not terribly expensive, usually costing $20 to $80. For those moving house, there may be a reconnection fee of around $20-$50 if the new property has been disconnected from the energy network.
Switching energy providers at the same property should in no way affect your supply of electricity. This is because the distributor is simply changing which retailer it informs about your electricity usage – there is no need for any changes to your home’s electrical infrastructure.
With all the attention-grabbing advertisements claiming competitive prices and quality service, deciding which energy provider is best suited to you is a real challenge. Not only do you need to consider the usage and supply charges of prospective retailers, but you’ll also need to factor in any other bonus incentives they offer, as well as their customer service credentials. That’s why Canstar Blue produces an annual review of energy providers in each state to help you pick the one that’s right for you: You can see how fellow Aussies rated their electricity providers using our customer satisfaction ratings:
To issue a complaint about your electricity retailer, you can contact the energy Ombudsman for your respective state or territory.
Before submitting a complaint to the ombudsman, try resolving the issue with your electricity retailer first. You and your energy company will usually be able to reach a solution without a need to take it further.
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