Big Electricity Bill Discounts May Not Add Up

Everyone loves a discount on electricity – but how solid are some of these special deals offered by Australian energy retailers?

Released this week, the  Essential Services Commission’s Victorian Energy Market Report 2016-17 says the state’s energy market works for some customers, but others are paying more than they need to.

It’s little wonder many Victorians (and Australians generally for that matter) tend to grudgingly stick with their current electricity retailer 1. In Victoria, an electricity customer who looks online for a new electricity deal will likely find themselves facing more than 230 generally available offers according to the Commission.

“Energy bills can vary by many hundreds of dollars and there is no consistent basis for how discounts are offered,” states the report. “It is possible to find offers with a 10 per cent discount that provide cheaper energy than other offers with discounts of over 30 per cent.”

Choice can be a very good thing, but too many choices and associated complexities creates confusion. It probably wouldn’t be too cynical to suggest the confusion experienced by consumers in the electricity market isn’t an unintended side effect; but this also works against retailers looking to acquire new customers.

“..  consumer psychologists and behavioural economists have shown the adverse impact of giving customers too much choice – price structures with two or three components have been shown to dissuade many customers from actively engaging with the market,” states the ESC.

Some of the seemingly generous discounts offered also have nasty gotchas buried in the fine print, and failure to observe the retailer’s conditions can result in an electricity bill shock. The Commission found 80% of energy offers tout some sort of discount – and almost all of them have conditions attached. It put the average electricity bill increase resulting from failing to meet all conditions for a year at $314.

The Victorian Energy Market Report 2016-17, which can be downloaded here (PDF), offers assistance in navigating the state’s electricity market and tips to make the most from competition, such as it is, between energy retailers.

Best Electricity Deals For Solar Power System Owners

When you have solar panels installed, it can throw some extra complexity into the mix when choosing an electricity retailer. As has been stated on a number of occasions here on SQ,  a high feed in tariff doesn’t necessarily equate to the best deal.

Last year, SQ blogger Ronald spent two days crunching numbers to determine the cheapest electricity plans for solar owners in Adelaide, and he’s never been the same since. If the exercise had such an effect on Ronald, what hope do we mere mortals have?

But seriously, it’s not quite as bad as all that – however, a bit of time and substantial patience is required. One of the tools you can use as a starting point is SQ’s solar friendly retailer comparison tool.

Footnotes

  1. It’s worth bugging our current retailer even if you couldn’t be bothered shifting. Tell them you’re considering taking your business elsewhere and you may be surprised by what they offer – but read the fine print. That you have to call to get a “discount” stinks, but that’s the nature of the game for now.
About Michael Bloch

Michael caught the solar power bug after purchasing components to cobble together a small off-grid PV system in 2008. He's been reporting on Australian and international solar energy news ever since.

Comments

  1. Something that intrigued me a little was that when I moved over to a solar feed-in plan my retailer increased my discount on electricity usage from the grid – albeit only by another 2%, but I am not complaining. I would have thought that a customer whom they have to pay for solar feed in is less desirable. Why would they apparently want to try harder to keep me once they have to credit me for feed-in?

    What I would also be interested in knowing is whether there are any indications yet as to what the change in Victorian solar feed-in tariffs will be on 1 July 2018.

    • Ronald Brakels says

      Hi Geoff

      Electricity retailers get paid for the avoided generation and distribution costs of exported rooftop solar electricity. So they are generally not losing anything by having solar customers and can come out ahead.

      There may be some improvement in Victorian feed-in tariffs as payments for benefits provided rooftop solar improve. Since wholesale electricity prices are expected to still be high I don’t think feed-in tariffs in Victoria will decline. Unfortunately, I expect Victorian electricity prices to increase in about a month at the beginning of next year.

  2. Chris Thaler says

    I have found that the start point is always the base rate per KWh being offered that will help determine the final charge after any offered ‘discounts’ are availed of.

    Time of use metering adds a complex level of distraction and charge variability within the various array of retailer offers.

    Decline all offers of ‘smart meters’ by your supplier as at a later date you may find a new ‘meter maintenance’ charge on your bill.

    Keep it simple and save.

    • While clearly there are concerns that smart meters can be “used for evil”, they do have advantages, and if you are in Victoria, you will have one anyhow. One advantage of a smart meter is that you can have monthly billing, and in Victoria you can also get up to 2 years’ usage data (broken down on half hourly intervals). Where the smart meter is also useful is in that I can see my usage and feed in as metered, from my retailer, on a daily basis.
      Of course, if you have your own smart meter you will have all the usage data you want.
      It is probably fair to say that there is need for regulation of what retailers may do with smart meter data.

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