Tariffs, fees and usage: How to make sure you’re getting the best energy deal

Set by the Australian Energy Regulator (AER), the default market offers (DMO) will come into effect across the country from July 1. Source: Getty.

With so many providers to choose from, along with a plethora of deals and discounts, it can be difficult to know whether you’re getting the biggest bang for your buck when it comes to your energy bills. But, according to an expert, there are some simple questions you can ask your provider to make sure you’re getting the best deal to suit your needs.

Rod Attrill, money expert at comparethemarket.com.au, told Starts at 60 that customers should make sure they’re aware of any additional fees and charges before signing on the dotted line for an energy plan.

“Energy bills can include a number of additional fees and charges,” he said. “These various fees and charges are generally outlined separately in your bill. It’s crucial to understand all of the costings within your energy bill so that you can find the right deal for your usage and take advantage of discounts.”

Attrill also noted the effect that the introduction of various default market offers could have on customer’s piggy banks, as the default price will dictate the maximum charge that electricity retailers can ask customers to stump up for their supply which could save some Aussies more than $100 per year.

Set by the Australian Energy Regulator (AER), the default market offers (DMO) will come into effect across the country from July 1, following the recommendations of the Australian Competition and Consumer Commission’s (ACCC) inquiry into electricity prices which concluded last year.

So, if you’re on the lookout for a new energy plan, here are the key points that Attrill recommends bearing in mind.

Choose the right tariff

A tariff is the amount charged for providing energy and, typically, they are made up of two components – a supply charge and a variable charge, also referred to as a usage charge. Your tariff will always be noted on your energy bill.

Several things can affect your tariff though, according to Attrill, including the type of meter you have at your property. He explained: “The retailers will set the tariffs and there are a few different pricing structures that they can use to do so. And different variable charges can apply depending on how much energy you use.

“There are some tariffs that are also dependent on the time of day you use your electricity. This is usually referred to as ‘Time of Use’ and includes off peak (when the energy network has very low usage), shoulder (this sits between peak and controlled load times) and peak (when the energy network has especially high usage, such as evenings and weekends).”

However Attrill also pointed out that tariffs will be impacted when the default market offers come into effect next month, as providers will then have to adhere to the maximum price as set out by the AER. This could save bill payers a significant amount of cash each year when they switch from an existing standard or market offer to the default offer.

Look out for variable charges

A variable charge is the amount you pay for each unit of electricity and gas you use, which is listed on your bill in cents per kilowatt hour for electricity (c/kWh) and cents per megajoule on your gas bill (c/MJ).

However these aren’t fixed and different variable charges can occur based on a number of factors, Attrill said.

He explained: “Firstly, energy usage can be charged in ‘blocks’, with either cheaper or more expensive rates charged for the first ‘block’ of energy used. You will see the extra energy charged at a different rate.

“Also, if certain appliances such as hot water systems or heating are separately metered and operate overnight, this may be listed as an off-peak tariff within your energy bill. Consumers should check if any of their appliances are separately metered and can be used overnight as this charge is usually cheaper with electricity demand at its lowest overnight.”

Customers who use renewable energy, such as solar power, will also encounter a change to their variable charges, with could result in higher usage costs. While the time of day, or season, could also have an effect, with Attrill explaining that some customers could be charged differently for the same amount of energy usage purely because of the time of day. He added that some gas tariffs also vary depending on the season, with rates differing in summer and winter.

“It’s really important for those who can, to take meter readings and seasonality into consideration when reading your bill and working out if the costs match up to your usage,” he advised.

Be aware of additional fees

When you’re already paying out for energy, it can be frustrating when you find yourself faced with additional fees and costs that you may not have been aware of. Attrill noted that while it is uncommon, some providers may charge an establishment fee to set up your account. He also pointed out that, should you choose to leave your contract early, you could then be forced to pay a termination fee.

Processing fees may also apply if you choose to pay your bills via credit card, while paying by direct debit presents the issue of late payment fees if you don’t ensure that you have enough money in your account when the bill comes out. It’s also important to bear in mind the cost of disconnecting and reconnecting your supply if you move house.

“These various fees and charges are generally outlined separately in your bill,” Attrill said. “It’s crucial to understand all of the costings within your energy bill so that you can find the right deal for your usage and take advantage of discounts.

“Don’t be afraid to look around for a plan that is better suited to your household’s electricity or gas use. Also, if you’re having trouble paying your energy bills then you may be eligible to receive a range of government assistance schemes. These vary from state to state so make sure to do your research to save yourself money and stress in the long run.”

Don’t feel tied in

Perhaps the most important thing to remember is that you don’t have to remain loyal to one provider, as Attrill stressed the importance of shopping around and comparing various deals to make sure you’re on the most suitable and affordable plan.

He suggests making use of online comparison sites such as comparethemarket.com.au to quickly and easily review all of the available options before committing to a single plan, as well as checking for any discounts or offers you may be eligible for, as some providers offer plans designed specifically for seniors.

“Comparethemarket.com.au can show you various discounts available in the market and additional information you may need to make the most informed choice for your household,” Attrill told Starts at 60.

“Shopping around at least once a year will help with reducing costs and opening up your options to cheaper and better plans. It’s free to switch too as you won’t be locked into a contract so make sure you review other options in the market as frequently as possible.”

He added: “There can be huge differences between providers and plans. A recent Australian Competition & Consumer Commission report found that the difference between the median standard offer and the best offer in market was $574 in Victoria, $365 in NSW and $832 in South Australia.”

Do you shop around to find the best deal or have you stuck with the same provider for years? If so, why?

Important information: The information provided on this website is of a general nature and for information purposes only. It does not take into account your objectives, financial situation or needs. It is not financial product advice and must not be relied upon as such. Before making any financial decision you should determine whether the information is appropriate in terms of your particular circumstances and seek advice from an independent licensed financial services professional.

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