There are some things in life that you just can’t avoid and paying energy bills is one of them – that is, of course, unless you’re one of few people who is happy living without gas or electricity, or perhaps a lucky grey nomad living life on the open road.
With so many different providers and tariffs to choose from, not to mention a plethora of deals, discounts and introductory offers, it can be hard to know whether you’re getting the most for your money, or whether your provider is pulling the wool over your eyes.
As the cost of energy continues to rise in Australia, many homeowners find themselves faced with extortionate bills. But it’s not all bad news as there are some simple things you can do to slash your bills and reduce the amount you are coughing up each quarter.
Here are some simple things you can do to save money on your utility bills.
You wouldn’t sign a legal contract without understand its contents, right? The same rule should apply when it comes to the deal you sign with an energy provider, as failing to understand key aspects of your bill could end up costing you a significant amount of cash.
Rod Attrill, money expert at comparethemarket.com.au, previously told Starts at 60 that customers need to ensure they’re aware of any additional fees and charges before signing on the dotted line.
“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.”
Additional charges can come in many forms, including establishment charges which some providers may ask you to pay to set up your account. There is also the risk – if you don’t read the small print – that you could be hit with a termination fee if you decide to end your contract early.
Processing fees may also apply if you decide to pay your bills via credit card, while you could also fall victim to late payment fees if you choose to pay via direct debit and forget to ensure there is sufficient money in your account. It’s also important to bear in mind the cost of disconnecting and reconnecting your supply if you move house.
A tariff is the amount charged by a provider for supplying energy and they are typically compromised of two parts, a supply charge and a variable charge, sometimes referred to as a usage charge. If you’re unsure about what tariff you’re on, you will be able to find it on any of your energy bills.
While supply charges are fixed, variable charges – which is the amount you pay for each unit of electricity and gas you use – are not, and there are several factors that can also have an impact on your bill, resulting in you paying more for your energy.
For example some tariffs, known as ‘Time of Use, depend on the time of day you use your electricity. On these plans, different charges apply when you use energy during peak and off-peak hours. Other factors such as what type of meter you have at your property and how much energy you use can also impact your tariff, so it’s really important that you make sure you’re on the best tariff to suit your individual needs.
However it is also worth noting that, as of July 1 this year, retailers are now required to cap their tariffs according to the maximum price outlined by the Australian Energy Regulator (AER), following the introduction of default market offers.
While there may be some perks to remaining loyal to providers such as discounts or better deals, more often than not, people simply opt to stick with their exisiting company out of convenience, rather than shopping around for a better deal that could potentially save them a lot of money.
Compare the Market’s Rod Attrill 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.
“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 said. “There can be huge differences between providers and plans.”
He added: “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.”
Some providers offer competitive deals as a way of enticing new customers to sign up, these include discounts for paying your bills on time and credit towards your bill when you switch providers.
IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial situation, objectives or needs. That means it’s not financial product advice and shouldn’t be relied upon as if it is. Before making a financial decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services advice.