2016 VIC Electricity Providers Ratings
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Canstar Blue research finalised December 2016, published February 2017.
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Powershop tops Victoria electricity ratings for second time
Energy is a grudge purchase that no one likes making, but that doesn’t mean you should just settle for any old electricity plan, because there could still be big savings to be made. There are more than 20 different electricity retailers operating in Melbourne and the rest of Victoria, all desperate to have you as their next customer. So, how are you supposed to tell which providers are the real deal and which are just chancing their luck? Canstar Blue can help with our detailed review of the Victoria electricity market, providing everything you will need to know to make a better-informed decision about your energy supply. You still won’t like paying for power, but if you can save a few bucks, you’ll at least feel a bit better about it.
We will start by introducing our customer satisfaction rating for electricity providers in Victoria. Each year, Canstar Blue surveys bill-paying customers across the state to find out how they rate their provider based on important factors such as billing, clarity, customer service and the value for money they offer. The ratings table above reflects their feedback, with Powershop the only retailer to achieve a five-star review for overall customer satisfaction.
Powershop has proved a clear winner this time, with no other retailer scoring top marks in any research category. Lumo Energy, Momentum Energy, Red Energy and Simply Energy all received four-star ratings overall, while the big three energy providers – AGL, EnergyAustralia and Origin – all got three stars from their customers. Powershop received five-star ratings across the board for the second year in a row. This is a great result for Powershop, which builds its energy service around the use of smart meters, allowing customers to closely monitor their usage habits, while also providing the opportunity to pre-purchase packs of power for later use at cheaper rates.
Our ratings highlight what customers think of eight different electricity providers in Victoria, but there are plenty more to choose from, which we’ll come to shortly. For now though, let’s guide you through the often confusing world of electricity supply and what you’ll need to know to get a better deal.
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About the Victoria electricity market
Victoria is a hugely competitive market for the electricity providers – it’s where many invest the majority of their time, effort and money in order to attract new customers. This is important to know because it means that you have the power to find a better deal – provided you are willing to do your research. This hasn’t happened by chance or overnight. Victoria was the first state to completely remove electricity price regulations in 2009, which means the energy companies are free to set their own products and prices, with minimal legislative interference. Households had been able to switch providers since several years earlier, but there was little financial incentive to do so until then.
With a fully deregulated energy market, Victorians now have a huge range of different retailers, plans and other incentives to choose from. However, with choice quickly follows confusion, and there is little doubt that the prospect of picking an energy provider is a daunting one for a great many households, which is why many will still be paying more for power than they need to. The price of electricity also continues to rise, most recently blamed on the closure of the Hazelwood Power Plant in Victoria in 2016, leading many to question whether or not deregulation has been good for consumers or not. That debate will continue for years to come, but for now the way to cut electricity costs begins with understanding the basics, as follows.
Types of electricity contracts in Victoria
There are two types of electricity contracts that a household in Victoria could be on – standard contracts and market contracts. Knowing which type you have is the first step to saving money.
- Standard contracts: These are effectively default energy contracts which households in Melbourne and the rest of Victoria will still be on if they have never switched providers. They have prices set by the retailers, but also come with strict rules set by the Essential Services Commission. Standard contracts (also known as ‘standing offers’) are ongoing contracts and have no exit fees. Electricity companies must offer a standard contract in addition to their market offers.
- Market contracts: These are contracts set almost entirely by the retailers. They come with varying contract lengths, discounts and benefit periods. These are the offers that are heavily promoted by the retailers and provide the opportunity for customers to cut costs, provided they stick to the conditions.
According to the Essential Services Commission, one in ten households in Victoria is still on a standard electricity offer. Canstar Blue research shows they could save hundreds of dollars a year by switching to market contracts, even with the same retailer. Market offer prices are usually cheaper than those on standing offers, plus customers can save through conditional discounts. Switching from a standard contract to a market offer is an easy way for people to save money on electricity costs, but finding the best market offer for you is not an easy task.
Market offers in Victoria come in all sorts of different shapes and sizes, but they all include two major costs – supply charges and usage charges.
- Supply charges: These are the costs that electricity customers incur simply for being connected to the grid. Supply charges in Victoria typically cost around $1 per day and remain the same every day no matter how much energy you use.
- Usage charges: These are the rates you pay for actual electricity usage. Depending on different tariffs (which we’ll come to), usage charges can vary considerably. Standard usage charges in Victoria can cost anywhere from 23 to 33 cents per kWh.
It’s very important to look at both of these charges when comparing different energy plans, but large households should pay particular attention to usage rates, while smaller households with modest energy usage should look for plans with lower fixed daily supply costs.
Electricity plans in Victoria
With more than 20 electricity providers competing in Victoria, you won’t be surprised to learn that there is a huge range of different plans to pick from, often differentiated by the discounts they offer. These plans broadly fall into two categories – those which have variable rates and those with fixed rates.
- Variables rate plans: Much like having a variable rate home loan, electricity plans have variable rate usage and supply charges. This means that your provider could change the prices you pay for electricity usage and supply at any time, as long as they give you prior notice. However, variable rate plans generally have cheaper rates than fixed rate plans.
- Fixed rate plans: If you don’t like the idea of prices changing at short notice, some electricity companies also offer fixed rate plans. With these, you effectively lock-in supply and usage charges for a set period, usually two years. This means you pay the same rates for the life of your contract, but this added convenience often comes at a higher price – much like fixed rate home loans.
The vast majority of electricity plans in Victoria come with variables rates. Fixed rate plans are usually only offered by the big energy providers, AGL, EnergyAustralia and Origin. However, as Victoria is a hugely competitive and innovative energy market, there are a number of retailers that are doing things differently, with ‘fixed cost’ energy plans also becoming common.
Fixed cost plans in Victoria
Different to the ‘fixed rate’ plans mentioned above, fixed cost plans allow customers to lock-in the amount you pay for power every billing period for a year. With fixed rate plans, you know exactly what price (i.e. per kWh) you will pay for power over a set period, but with fixed cost plans you know exactly what your bill will be regardless of how much power you actually use. Origin was the first retailer to launch a fixed cost plan in 2016 called Predictable Plan, quickly followed by Sumo Power with its All You Can Eat plan.
Solar power plans in Victoria
Most of the major electricity retailers in Victoria have specific offers for solar power customers, with minimum standard feed-in tariffs determined by the Essential Services Commission for the amount they must pay customers who export unused energy into the grid. While retailers must adhere to minimum pricing, some pay considerably higher feed-in tariffs. Diamond Energy, for example, offers up to 100 cents per kWh for exported energy during periods of high demand.
Electricity discounts in Victoria
In an effort to stand out from the crowd, most energy companies in Victoria boast market offer plans with huge discounts off usage charges – up to 40% in some cases. While discounts can be a great way to cut your overall costs, it’s important not to assume that the providers promising the biggest discounts work out the cheapest, because it’s often not the case at all. Canstar Blue research found that an electricity plan with just a 2% discount worked out cheaper than some of those offering 30% or more off. Discounts will usually be applied if you:
- Pay your bills on time
- Pay bills by direct debit
- Receive bills via email
- Some retailers will also add an extra discount if you sign up online
Discounts usually apply to electricity usage charges only, but some retailers provide discounts off your entire bill. While tempting, it’s important to compare energy plans based on their base rates as well as the conditional discounts. Failing to meet the conditions of a discount will mean you are left paying the non-discounted rate, which will be much higher. You will also be charged a fee. Also be sure to check the benefit period of your discount, because most only apply for 12 months, after which you will pay the full price.
If big discounts don’t appeal, you will find a range of other incentives offered by the electricity companies in an effort to get you to sign up. Simply Energy, for example, has a plan that brings ‘free’ Gold Class movie tickets throughout the year, while Red Energy and Lumo Energy have rewards programs that provide money off things like gift cards, theme park tickets and holiday packages. It’s also common for retailers to offer up to $100 off your first bill when you sign up online.
Electricity tariffs in Victoria
Energy tariffs are often the cause of confusion for customers, but once you know what they are and how they work, you will realise they can present an opportunity to save. Put simply, ‘tariffs’ relate to the pricing structure of your energy plan, with different usage charges applying based on when you use power. Tariffs available in Victoria broadly fall into two categories:
Single rate tariffs
If you have a single rate tariff, you will pay the same usage charges no matter what time of day you use power – so the cost of using air conditioning, for example, will be the same whether it’s used in the early evening (peak times) or in the middle of the night (off-peak times). You might also see a single rate tariff referred to as a ‘peak rate tariff’ as all electricity usage is effectively charged at peak rates.
Time of use tariffs
If you have a time of use tariff (also known as ‘flexible pricing’), you will be charged different rates depending on when you use power. These rates are split into three categories, although the exact times in which they apply can vary between electricity distribution networks.
- Peak: These rates usually apply from the early afternoon until the late evening (e.g. 2pm until 8pm). The most expensive rates you will pay, these charges can cost up to and over 30 cents per kWh.
- Off-peak: These rates generally apply from the late evening until the early morning (e.g. overnight from 10pm until 7am) and at weekends. These charges typically cost less than 20 cents per kWh.
- Shoulder: These rates apply at all other times of day (e.g. from late morning until early afternoon). Cheaper than peak rates, but more expensive than off-peak rates, expect to pay around 25-26 cents per kWh.
Time of use tariffs are only available if your home has a smart meter. As the majority of homes in Victoria now have smart meters installed, flexible pricing is very common and can be helpful in reducing energy costs, particularly if you generally use most power at off-peak times.
Controlled load tariffs
In addition to single rate and time of use tariffs, households in Melbourne and other parts of Victoria can also benefit from a controlled load (also called a dedicated circuit). A controlled load is a dedicated metering connection that allows you to pay for high-usage appliances at a cheaper rate. A dedicated circuit is usually only applied to electric hot water heaters, but with more than one circuit, households can also apply them to pool pumps. Controlled load tariffs are much cheaper than other charges, usually less than 20 cents per kWh. The drawback is that power will only be supplied for a few hours each day (i.e. enough time to heat water for the day or to clean your pool).
Electricity distribution networks in Victoria
The other factor that could impact the size of your next electricity bill is your location. Victoria has five different electricity distribution networks and the cost of supplying power to your home is different depending on which network you happen to live within. While the energy retailers are simply the customer-facing business, it’s the distributors who manage the infrastructure (i.e. the poles and wires) that transports energy to your living room. The five electricity distributors in Victoria are:
- Citipower – servicing Melbourne city and inner suburbs
- Jemena – servicing northern and south-western suburbs
- Powercor Australia – servicing western suburbs and western Victoria
- AusNet Services – servicing outer northern and eastern suburbs, plus eastern Victoria
- United Energy Distribution – servicing southern suburbs and Mornington Peninsula
As the retailers pass on distributor costs to their customers, the suburb you decide to live in will impact your energy bills. For example, an Origin customer living in north Melbourne would pay a different rate to an Origin customer in south Melbourne, even if they have the same contract and identical usage habits. Distributor costs can account for up to 50% of your overall bill.
If you are a home owner, there is nothing you can do about this, but if you are renting a home or considering where to buy, it may be worth looking into.
Electricity providers in Victoria
Now you know what to look for from an energy plan and understand the costs that come with them, all you need to do now is pick energy retailers to compare. The electricity providers that operate in Victoria are:
- 1st Energy
- Alinta Energy
- Blue NRG
- Click Energy
- Diamond Energy
- Dodo Power & Gas
- GloBird Energy
- Lumo Energy
- Momentum Energy
- Online Power & Gas
- People Energy
- Red Energy
- Simply Energy
- Sumo Power
While most of these electricity retailers operate throughout Australia, GloBird Energy, Online Power & Gas, People Energy and Sumo Power all focus specifically on Victoria. However, even those with a national reach tend to offer a wider range of plans in Melbourne than anywhere else. The list above also includes a couple of companies that specialise in small business electricity supply, but still offer at least one residential contract.
Where can you find the cheapest electricity prices in Victoria?
There is no simple answer to this question because it depends on a multitude of factors, from the type of contract you have, to your discount, electricity tariffs, and even where you live. To give you an idea of where to find the cheapest energy rates in Victoria, however, Canstar Blue has produced a cost comparison review of plans from some of the major providers mentioned in this report. Being the cheapest provider does not automatically make them the ‘best’, but if it’s purely the bottom line you are concerned about, be sure to check out the details.
Questions to ask before signing up to a new plan
This report offers lots of useful information to help you make a more-informed decision about your electricity supply, so now it’s up to you to compare providers and plans. To make sure you get a better deal, be sure to consider and ask the following questions:
- What type of electricity contract is it? (e.g. standard or market contract)
- What are the supply and usage rates? (How much are you paying per kWh?)
- What different tariff options are available and how do the charges vary?
- What percentage discount is offered and what are the conditions?
- Can you add a controlled load (dedicated circuit) for water heating?
You will be able to find the answers to these questions in the energy price factsheets of each provider you compare. However, these documents can be difficult to understand, so don’t be afraid to pick up the phone and get the answers you need. It’s also a good idea to contact your existing provider and ask if your current deal is the best they can offer.
Remember that the electricity providers should be working hard to keep you happy, so if you’re not completely satisfied with the price you’re paying or the servicing you’re receiving, you now know what you can do about it.
Frequently asked questions
Canstar Blue commissioned Colmar Brunton to survey 6,000 Australian adults across a range of categories to measure and track customer satisfaction. The outcomes reported are the results from customers within the survey group who live in Victoria and pay the electricity bills in their household – in this case, 1,214 people.
Brands must have received at least 30 responses to be included. Results are comparative and it should be noted that brands receiving three stars have still achieved a satisfaction measure of at least six out of 10. Not all brands available in the market have been compared in this survey. The ratings table is first sorted by star ratings and then alphabetically. A rated brand may receive a ‘N/A’ (Not Applicable) rating if it does not receive the minimum number of responses for that criteria.