No one wants to pay more for power than they need to, but if you’re not a savvy energy shopper, that’s exactly what could happen to you. To find the best deal on electricity, you need to understand how pricing works and what to look for from an energy provider, including the discounts they offer. Sounds like a lot of hard work, doesn’t it? Well, Canstar Blue aims to make sense of the complicated and has produced a cost comparison for electricity retailers in Melbourne, showing their highest discounted offers and what you can expect to pay. No gimmicks – just helpful, real costs that show where you can find a cheaper deal.
Everyone in Victoria knows how competitive the local energy market is, but it can be hard to see through all the promotional material and work out if you’re really getting a good deal or not. That’s why we’ve crunched these numbers to show where you can find the cheapest electricity rates in Victoria if your home is on the Citipower network and what you need to do to get them. It’s worth noting, however, that there are five electricity distribution networks in Victoria and prices may change depending on where you live.
Based on the cents per kWh usage prices and daily supply charges of the energy providers we’ve compared, plus average energy consumption figures, the following table shows estimated quarterly electricity costs for five-person households on the Citipower network in Melbourne. We show costs before conditional discounts have been applied and also how much these discounts could save you.
Which electricity provider is cheapest in Victoria?
Based on this comparison of 12 electricity retailers in Victoria, we can see that Red Energy, Momentum Energy, Simply Energy and Powerdirect provide the cheapest rates before any conditional discounts have been applied. However, once you factor in discounts, several other retailers also become very competitive, most notably Lumo Energy, Dodo Power & Gas and Powershop.
|Electricity provider||Electricity plan||Discount||Non-discount cost||Discount cost|
|Energy Australia||Flexi Saver||32%||$565.51||$419.56|
|AGL||Set and Forget||30%||$556.18||$425.06|
|Dodo Power & Gas||Residential GD||30%||$537.14||$403.99|
|Simply Energy||Plus 35/20||35%||$503.27||$358.43|
|Lumo Energy||Advantage Premium||33%||$578.62||$387.68|
|Momentum Energy||Smile Power Plus||2%||$424.84||$416.35|
|Alinta Energy||Fair Deal 35||35%||$588.24||$424.16|
|Powerdirect||30% Market Offer||30%||$508.35||$388.90|
|Red Energy||Living Energy Saver||10%||$413.75||$372.37|
Costs based on annual usage calculations broken down into quarterly payments. Calculations based on statistics from AER for a five-person household on the Citipower network. January 2017.
As you can see, costs can vary significantly and those big headline-grabbing discounts are not always as good as they seem. Momentum Energy is a case in point – it offers a very modest 2% off, but still works out cheaper than some of the providers claiming up to 30% or more off.
How to get the best energy discounts
As you can see from our cost comparison, you could save as much as 40% just by sticking to the conditions of your contract, such as paying on time or by direct debit. However, the non-discounted costs show you that, in many cases, the providers with the highest discounts also have the most costly mixture of usage and supply charges – which means those huge discounts are not always as good as you might think. There are exceptions, however. Momentum Energy, Simply Energy and Dodo Power & Gas offer competitive prices before and after discounts have been applied, for example.
Electricity discounts are only a good thing if you meet the conditions in the first place, otherwise you will be left paying the full amount and could even face a fee. Pay on time discounts are the most common, but some providers – most notably AGL and Origin – require customers to pay by direct debit to get their discounts. Others make customers do both, as well as receive their bills and other correspondents via email instead of post.
When comparing discounts, it’s important to check whether you’re getting a discount off your entire bill, or just the usage or supply charges. Discounts have become the main point of difference when it comes to comparing providers in Victoria, so pay attention to what you’re really getting. For most large households, a discount off usage costs will be more beneficial than a discount off fixed supply charges. Also be wary of benefit periods, as some discounts may look very attractive when you sign up, but could disappear after a year and won’t return. Make sure that, if you agree to a two-year plan, that the benefit period is also two years. Some providers have been known to offer a benefit period of only 12 months on a two-year agreement.
Here are some questions you should consider asking any prospective energy company:
- Is the discount off the entire bill, or just usage or supply charges? As usage charges make up the majority of most electricity bills, this should be your preference, although some providers do take discounts off your entire bill.
- How long is the benefit period? It’s typically that the headline discount offers you see will only apply for the first year of your plan. After that, you will start paying the non-discounted cost, which as you can see from the table above, are a lot more expensive.
- What are the conditions of your discount and what happens if you don’t meet them? Most people will find it easy to pay their bills on time or by direct debit, but failing to do so one billing period could result in you losing the benefit all together. You could even be slugged a fee.
Victorians are inundated with different incentives to try and persuade them to sign up with a particular electricity provider. For example, Lumo Energy has a rewards program called ‘Lumo Ameego’ whereby customers can benefit from discounts at a range of retailers. You can also get money off cinema and theme park tickets, amongst other things. Other providers offer a credit on your first bill when you sign up online, usually a fairly modest $50 or $100. Meanwhile others try to attract customers based on their hobbies – be it going to the movies, or supporting a sports team. For example, Simply Energy has an energy plan promising 16 ‘free’ Gold Class movie tickets over two years and has also had a plan offering a $100 megastore voucher for the Hawthorn Football Club.
While these discounts can be appealing, it’s important not to let them dictate your overall decision. This should be made based on a provider’s usage and supply charges, and what you expect to pay when the bill arrives every month or quarter. These incentives can, however, be a useful point of difference when comparing similar offers.
Which electricity provider is rated highest in Victoria?
No one wants to pay more than they need to for electricity, so it makes sense that the bottom line will decide which provider many consumers agree terms with. However, other factors, most notably customer service, can also prove important. Call centres are a major bugbear for customers because there’s nothing worse than hanging on the phone for ages, trying to get a straight answer to a straight question. The energy companies should be working hard to keep you happy, in terms of the price you pay, but also the customer service you receive. That’s the reason why Canstar Blue produces customer satisfaction ratings for electricity providers in Victoria every year. Powershop is currently rated highest overall.
If there is one message to take away from this report, it’s that regularly reviewing your electricity plan and comparing it to other offers on the market is a wise move, particular in Victoria where the energy companies are competing hard for your custom. You might just save a few bucks.