If your energy provider drops prices, will your bills get cheaper?

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When you sign up with an energy provider, you will (hopefully) compare rates and find a good deal that works for you. But the reality of energy retail is that prices can, and do, change all the time. So, what happens when the company you signed up to changes rates? Do the new prices automatically roll over to you, or is there a bit of work to do on your behalf as a consumer? Understanding what happens when energy prices change is crucial to getting a good deal long after you first signed up.

In this guide, we’ll uncover all the tricks the energy retailers use to attract your business, plus we’ll show existing customers how to ensure they’re getting the best gas or electricity rates. Keep reading for more details or jump straight into our comparison tool below to see a range of deals in your area.

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If my energy provider drops its prices, will I receive cheaper rates?

In most cases, you will remain on the same rates as when you first signed up to a deal, regardless of whether your provider has changed its prices. If a retailer has slashed its prices, then it’s generally only new customers signing up who will receive the updated and cheaper energy rates. To ensure you’re getting the best deal, it’s worth asking your power company if the latest rates apply to you. If not, you’ll have to request a switch to the up-to-date prices.

It’s basically a sneaky tactic some retailers use when they want to be become more competitive in the market and attract new customers, but don’t want to pass the cheaper rates onto their existing customers. You have no doubt heard about the ‘loyalty tax’ right? This is it in action.

It’s worth saying, however, that not all providers will do this. Some will genuinely pass on their new reduced rates to existing customers. Australia’s big three energy companies – AGL, Origin and EnergyAustralia – tend to pass on price reductions if they occur during the annual price change cycles in January and July.

Energy rates go up and down

What about price increases?

Well, this is another story altogether, as you might expect. When you sign up to an energy plan, it will usually come with either fixed or variable rates. As you would guess, fixed rates means the prices you pay (per kWh usage and supply charges) will remain the same for the agreed contract period. But if you have signed up to variable rates, these can be changed at your retailer’s discretion. In the event that your retailer is increasing its prices, chances are you will be passed on the new more expensive rates. So you should definitely keep an eye out for any correspondence from your retailer, be it via email or mail.

Shouldn’t my provider pass on the cheapest rates available?

Retailers are not required to pass on energy price changes to existing customers, however some companies may do so at their discretion. That’s why you could sign up to the cheapest deal around today, but tomorrow could be a different story. A quick way to check if your provider has passed on any rate changes is to compare your plan’s current usage and supply charges (located on your bill) to the same deal in our comparison tool or on the retailer’s own website.

Remember, power companies chop and change their products all the time, meaning that if you’ve been with the same provider for several years now, you could be on a retired plan that’s no longer publicly listed. If this is the case, it’s worth looking into the specific rates you pay compared to what is now available.

The Sumo Example

As we’ve explained, providers can pretty much change prices whenever they want, with some restrictions for certain customers. The result of this, is that you could sign up with a new provider today, only for that same provider to increase its rates tomorrow, leaving you with a terrible deal if you don’t quickly notice the change. An example of customers being stung by rate changes in 2018 involved Melbourne-based retailer Sumo. Far from the only company to change prices, Sumo was ‘unfortunate’ in that it acquired lots of new customers through consumer group Choice, before passing on a rate increase. Given the circumstances, it turned out to be a high-profile PR disaster for Sumo.

When do energy prices change?

The reality is that, if you live in an area with a deregulated energy market, prices can change at any time, at your provider’s discretion. However, traditionally energy providers will adjust their rates in July if you live in New South Wales, Queensland or South Australia, while January is the key date for price changes in Victoria. If you’re on a standard (default) energy contract, your prices should only change once a year. But if you’re on a market offer, prices can change at any time, provided you’re not locked into a fixed rate product.

Cheap Energy Deals

Take a look at some cheap energy plans currently on our database. Click on your state to see which deals may be a suitable match for your household’s power needs. Use our energy comparison tool for a specific range of quotes based on your suburb.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Ausgrid network in Sydney but prices may vary depending on your circumstances. This comparison assumes general energy usage of 3900kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Citipower network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Energex network in Brisbane but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4600kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the SA Power network in Adelaide but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Why do energy prices fluctuate?

Electricity and gas prices move around a lot due to local and international market conditions, demand on energy supply, as well as distribution and generation costs. A retailer buys energy at a wholesale rate which is then marked up in price and sold to you and millions of other customers. These wholesale rates are listed on Australia’s wholesale market and change every 30 minutes.

Why is my electricity bill suddenly so high?

There are many reasons that may explain why your bills are skyrocketing. Here are some common reasons to consider:

  • Seasonal consumption: Has your power usage in summer and winter increased due to air conditioning and heating?
  • Changing habits: Are you working from home and spending more time using appliances like dishwashers and washing machines?
  • Expanding home: Has the size of your family increased since your last bill or have you made renovations to your home?
  • Energy efficiency: How energy efficient is your home, is it properly insulated and are you being stung for standby power?
  • Estimated bills: Has your energy provider given you an estimated bill for power usage in the event that you have monthly billing or the metre reader couldn’t get to your meter?
  • Price hikes: Prices and deals changes frequently, so if you’re not paying close attention, your rates may have increased.

Who pays the most for energy in Australia?

South Australians typically pay the highest prices for energy in Australia. Recent Canstar Blue analysis found that the average electricity bill in South Australia is $1,759 per year, compared to the cheapest in south east Queensland at $1,367 a year. For natural gas, it’s a different story as customers in the capital (ACT) reported the highest average gas bills, trailed closely by Victoria and SA.

How to ensure you’re getting the best electricity prices

While it isn’t rocket science to understand that retailers change energy prices a lot, it can be difficult to keep up with movements and make a judgment call. The easiest way to see if your plan’s rates are competitive is by regularly comparing deals online. This way you’ll have a point of reference to identify what is or isn’t a good electricity rate. Alternatively, you can always get in touch with your existing provider and ask to be put on the best possible rates for your plan. At the end of the day, it’s largely about being proactive and keeping an eye on the market.


Image credit: Prostock-studio/Shutterstock.com, Pla2na/Shutterstock.com

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