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“Why is my power bill so darn high?” What Aussie bill payers need to know

Aussie summers are getting hotter and hotter, and more of us are working from home than ever before. We’re getting a shock when we open their power bills; not of static electricity kind, but rather wondering how and when our bills got so high.

So, how did we get here? Well, there are a few factors. Government deregulation of the National Electricity Market over the last 20 years was intended to drive down prices; in practice, it’s been a mixed bag, with power prices rising at levels well above inflation. So if it feels like you’re paying more for your power than ever, that’s because you probably are.

But that’s not all she wrote on the issue. The electricity plans offered by electricity providers come with all sorts of different conditions. Pick just the right one for you, and you can save a mint. But don’t follow the conditions, and you’re in for an unpleasant surprise. Electricity retailers are renowned for their complicated plans. They seem to have the same goal in mind: making the most money possible. Unless you know what to look for, your power plan can be positively disempowering.

Oh, but it gets worse still. There are hundreds of dollars of difference in price between the cheapest and most expensive plan on the market; just ask the Australian Energy Market Commission [1], who finds the difference can be up to $522.

As Australia’s third-oldest newspaper The Examiner puts it:

“The main energy companies’ default method is to manage actual, long-term consumers as complete cups. It’s come to the ACCC to tell customers that all the power retailers give discounts if a customer tries to ask. Don’t ask and you’ll pay the mug’s price.”

So, what to do? The good news is, there’s help on the horizon – if you do a bit of research. And it’s less research than you might think, thanks to electricity plan comparison websites. You no longer have to spend many hours of tedious work ringing up call centers and talking to commission-seeking salespeople. You don’t have to figure out what providers service your area, visiting each one of their websites. Electricity plan comparison sites do the hard work for you; but even then, providers make their plans complicated enough that dollar-value estimates won’t necessarily cut it. So what seems like a good deal on the face of it can end up painfully expensive.

So, what to look for? It’s not enough to look at a list of electricity providers compared with star ratings (urgh), or even dollar-value estimates. That’s because there are a few game-changing factors; namely, the conditions of the contract, and whether they’ll work for or against you. Get this right, and you potentially save hundreds; get it wrong, and you’re in trouble. Because of this, many electricity bills pay to end up spending a lot of money because it sounds like it’s going to be complicated; but it’s not as bad as it sounds.

Some things to look out for are supply charges, per-kWh usage charges, and whether your tariff is fixed or time-variable. The supply charge is what you pay just for grid connection, even if you use no electricity. Usage is (as you may have guessed) what you use. On a single tariff plan, there’s one per-kWh tariff; if you’ve gone Time of Use, you’ll pay significantly less for off-peak/shoulder usage. Sounds good? There’s a catch. Peak power tariffs can be seriously high. It’s a disincentive to use power during peak times; but if you’re working from your air-conditioned home during the day, it’s a recipe for disaster.

What to do? Find a website that elaborates on the contract conditions, spends about 15 minutes researching what these conditions mean. Find the right plan for how YOU use electricity, not Bob down the road. Make the switch, and it’s the easiest several hundred dollars you’ll make this year.

Already compared electricity providers a few years back? Well, you’re overdue; it’s best to check every 1-2 years because the market is changing fast. The AEMC has announced that prices are dropping and will continue to do so. So, living somewhere within the National Energy Market? head to the following links to compare what’s available:

The Econnex energy comparison tool includes dollar prices and the main conditions of the contract; they can even make the switch for you. Too easy!

 

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