How to save hundreds on your power bills

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Many Australians are spending hundreds of dollars a year more on electricity than they need to, but the good news is there is an easy way to save. You simply need to understand what type of energy contract you’re on. In this article, Canstar Blue explains the difference between standard and market electricity contracts, showing examples of how much customers can expect to save by switching.

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Standard vs Market Contracts

If you’re not on a market offer energy plan, then you’re most likely paying too much for electricity. Market offers are contracts designed by electricity retailers and often include discounts, competitive rates and other sign-up incentives to help reduce costs or provide other value add-ons. The alternative to market offer plans is standing offers. These are default, government-regulated energy deals which usually charge higher rates and don’t include any discounts. You will likely be on a standard contract if you have never switched retailers, or haven’t switched in several years. The only notable advantage of standing offers is that they have no exit fees and there are stricter limitations on when retailers can adjust their prices. However, used correctly, market offer plans will almost always work out cheaper.

Households could save hundreds of dollars a year by switching contract types, even with the same energy retailer. And in many cases, even greater savings could be made by switching from a standard contract with one retailer to a market contract with another.

According to the Australian Energy Regulator, as many as 1 in 4 households in some areas remain on a standard contract – that means millions of Aussies paying too much for electricity. Canstar Blue breaks down each state below, comparing the annual cost of standing offers to the cheapest market offers of some of the largest retailers. These tables should be used a guide only as costs will not be updated regularly.

New South Wales

Electricity retailer Annual standing offer Annual market offer (plan name) Savings
Alinta Energy $2,658.32 $2,115.11 (Fair Deal 23) $543.21
Powershop $2,513.83 $2,147.23 (Online Saver) $366.60
Origin Energy $2,659.24 $2,355.61 (Saver) $303.63
Click Energy $2,949.92 $2,300.78 (Gold) $649.14
Red Energy $2,638.39 $2,267.48 (Living Energy Saver) $370.91
Simply Energy $2,665.80 $2,296.22 (Simply Plus) $369.58
Average $2,680.92 $2,247.07 $433.84

Annual costs based on a typical five person household on the Ausgrid network in Sydney, postcode 2040.

As you can see, a typical household on the Ausgrid network in Sydney could save as much as $500 a year by switching between contracts with the same retailer. Even greater savings are possible by switching contracts AND retailers. All you have to do is pick up the phone or search online and switch.

Queensland

Electricity retailer Annual standing offer Annual market offer (plan name) Savings
AGL $2,258.07 $2,071.82 (Set & Forget) $186.25
EnergyAustralia $2,257.38 $1,971.36 (Flexi Saver) $286.02
Origin Energy $2,246.58 $2,051.97 (Maximiser) $194.61
Click Energy $2,335.57 $1,984.16 (Opal) $351.41
Red Energy $2,224.95 $2,056.95 (Easy Saver) $168.00
Simply Energy $2,173.66 $2,029.80 (Simply Plus) $143.86
Average $2,249.37 $2,027.68 $221.69

Annual costs based on a typical five person household on the Energex network in Brisbane, postcode 4064.

Queenslanders can save $221 on average per year by switching to a market contract. While that isn’t all that much when compared to the other states, that’s still $200 you’d probably rather see in your pocket than your power company’s. Once again, switching between contracts AND retailers could herald even greater savings.

Victoria

Electricity retailer Annual standing offer Annual market offer (plan name) Savings
AGL $2,890.78 $2,094.08 (Savers) $796.70
EnergyAustralia $2,957.16 $2,150.91 (Flexi Saver) $806.25
Origin Energy $2,868.52 $2,131.74 (Maximiser) $736.78
Lumo Energy $3,069.71 $2,015.87 (EDeal) $1,053.84
Red Energy $2,691.76 $2,101.63 (Living Energy Saver) $590.13
Click Energy $2,843.61 $2,156.63 (Emerald) $686.98
Average $2,886.92 $2,108.48 $778.45

Annual costs based on a typical five person household on the Citipower network in Melbourne, postcode 3122.

Electricity discounts are generally much higher in Victoria compared to elsewhere in Australia. As a result, Victorians stand to save the most by switching from a standing offer to a market offer. We found that market offers are $778 cheaper on average. Lumo standing offer customers could save over $1,000 simply by switching to the retailer’s cheapest market offer.

South Australia

Electricity retailer Annual standing offer Annual market offer (plan name) Savings
AGL $3,113.66 $2,774.18 (Set & Forget) $339.48
EnergyAustralia $3,551.01 $2,822.22 (Flexi Saver) $728.79
Origin Energy $3,128.32 $2,673.15 (Maximiser) $455.17
Lumo Energy $3,246.48 $2,705.42 (Advantage) $541.06
Red Energy $3,246.48 $2,864.56 (Saver) $381.92
Simply Energy $3,174.22 $2,756.98 (Simply Plus) $417.24
Average $3,243.36 $2,766.09 $477.28

Annual costs based on a typical five person household on the SA Power network in Adelaide, postcode 5033.

South Australian residents are already slugged the highest power prices in the country, so don’t punish yourselves further. If you’re on a standing offer, you could save $477 on average per year. All you have to do is contact your energy company and ask for a market contract. And once again, even greater savings are possible by switching retailers AND contracts.

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Finding the cheapest market offer

While market offers are clearly cheaper, not all market offers are created equal. So how do you find the best deal? When shopping around for a market contract, there are a few key things to keep an eye out for, such as rates, discounts and benefit periods. Most retailers will only supply advertised discounts for a ‘benefit period’ of 1 to 2 years. After this period expires, customers will need to renew their plan or otherwise be forced to pay much higher rates, usually the same as standing offer prices – or even higher!

Customers must be vigilant that some energy retailers simply mask massively hiked base rates behind seemingly generous discounts. In some cases, you may find market offer plans with higher rates than the retailer’s standing offer prices.

Fortunately, Canstar Blue’s product comparison tool has done all the work for you, taking the guesswork out of comparing plans. Find out where you can find a great deal in your area with our energy tool via this link.

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