If you think you’re paying too much for power, it’s time to check your energy plan for conditional discounts, with a new Canstar Blue survey finding that many customers are not getting the savings they think they are.
More than 3,000 households across the country were asked if they receive a discount on their electricity bills, and seven out of ten (70%) said they do. However, after further questioning, it became apparent that many of them are probably mistaken, and are in fact paying full rates for power.
That’s because two-thirds of respondents (63%) have been with their electricity provider for five years or more, and are therefore unlikely to be receiving any conditional discount on their bills.
The energy discount trap
Big discounts are what the energy retailers use to attract new customers, but as most have short benefit periods, consumers can easily fall into the trap of thinking they’re still getting a discount years later when in fact they are probably not.
Not paying attention to expiry date can be a costly mistake. Once the benefit period of your plan ends, you will start paying significantly more for power. If you receive 30% off your costs, that’s an extra 30% you’ll be paying when the discount expires. The retailers will be banking on you forgetting about your discount.
You must think of big discount contracts as introductory offers and consider your options again once the benefit runs out. The fact is that, if you have been with your existing provider for two years or more, you are almost certainly paying more for power than you would need to. The nature of big discounts is that new customers are the ones who stand to save, while those who haven’t switched and are paying more are simply subsidising the big discounts that other people are getting.
However, not all retailers hope their customers forget about their discounts and end up paying more. Origin Energy, for example, has started to contact customers once they near the end of their market offer, inviting them to re-sign with a new discount.
Big discounts aren’t always as good as they seem
Make sure you avoid the trap of assuming that the energy plans with the biggest discounts automatically mean the biggest savings, because it’s often not the case.
A recent Canstar Blue review of electricity contracts across the country found various examples of where plans with fairly modest discounts of just 10% or less actually worked out cheaper overall than some others promising up to 40% off.
To get a good deal, you need to understand exactly what you’re getting, what you’re getting it off, and what you need to do to get it. The biggest discounts don’t always mean the biggest savings, but generally the plans with discounts off your entire bill will work out cheaper than those offering a discount off just usage charges. Energy providers with discounts applied to entire bills include Click Energy, Red Energy, Lumo Energy and Momentum Energy.
Most importantly of all, make sure you’re able to meet the conditions of the discount in the first place. Failure to do so will result in much higher bills, plus a fee. Like we said before, if you have a plan with a 30% discount, that’s an extra 30% you’ll need to pay if you fail to meet the conditions.
How to find a good discount deal
Everyone should annually review their energy plans to ensure they’re getting a good deal. If you’re not getting a discount from your provider, ask for one. If you’re discount has expired, ask for it to be reinstated. If you have no luck with your existing provider, there will almost certainly be savings out there for you.
Discounts are usually offered to customers who either pay their bills on time, or pay by direct debit. Additional discounts are also commonly offered for choosing email billing rather than receiving bills in the mail. It’s also common that the best deals will be available online only.
While the majority of big discount offers only apply for a year or two, you may find some providers offering ongoing discounts that do not expire. Click Energy and Dodo Power & Gas are the most prominent to offer ongoing discounts.
Above all else, however, it’s important to check the usage and supply charges of any plans you are considering. As we have established, some plans with big discounts also have higher than average base rates. The best way to determine the real value of an energy plan is to look at the small print. Compare several energy price factsheets and consider what represents a good price in your area. Once you get an idea of real costs, you can start comparing discounts.