Be switched on about electricity changes to save money on bills

Being complacent about energy bills is costing Australian households plenty, and a new safety net system for some customers has resulted in other paying more.

Electricity customers are being urged to check what they’re paying as a new pricing system adds a fresh layer of confusion.

July’s introduction of price caps for the most expensive electricity offers was supposed to make power bills simpler and cheaper. However, the new system has been criticised for costing some households more and causing consumer inaction.

Energy specialists say it’s more important than ever to check you are getting the best power price from the nation’s 35-plus electricity retailers.

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Default market offers (DMOs) launched in New South Wales, South Australia and South East Queensland on July 1, while a similar Victorian default offer started at the same time.

They have replaced standing offers, which were generally the most expensive plans given to people who did not engage with retailers.

Despite DMOs effectively setting a safety net price, they are not the cheapest price and many people may be missing out on savings, says consumer group Canstar Blue’s spokesman, Simon Downes.

Generation and distribution cost make up the biggest portion of our electricity bills.

“There was always the concern that creating a default price will create another generation of consumers who feel there’s no need to shop around,” he said.

“If you settle for the default price you are now settling for the most expensive price you can pay.”

Mr Downes said the best prices available were about 15-16 per cent below the DMO reference price and consumers should check both retailer websites and comparison websites to see how their current plan stacked up.

The DMO reference price is based on standard residential use and is $1570 a year in Queensland, $1941 in SA, and between $1467 and $1957 in NSW depending on the zone.

The Victorian Default Offer reference price is a competitive price rather than a safety net and is currently $1334 a year.

Mr Downes said since the default offers started, some retailers had increased other usage charges.

Others say default offers won’t have a major impact because the biggest parts of power bills are distribution and wholesale costs.

Australians have some of the most expensive electricity prices on the planet.

And fewer people appear to be switching providers.

Australian Energy Market Operator data shows almost 172,000 households switched in July, down 24 per cent on the 225,000 that switched in July 2018.

EnergyAustralia managing director Catherine Tanna recently said the rate of customers switching retailers had “slowed down a little bit”.

She said it was hard enough for electricity retailers to keep up with all the rule changes “so it must be terribly confusing for customers”.

Powershop chief customer officer Catherine Anderson said the new system had resulted in power prices “coming together” as some retailers no longer listed huge discounts on artificially inflated prices.

“Now everyone’s providing the discount off the same reference point,” she said.

“I know we’re all busy and energy can feel confusing, but taking a little time out of your night once a year will help you save money.”

The Federal Government last week announced plans to give energy consumers access to their usage data so they could shop around and show other retailers.

@keanemoney

CUT YOUR POWER COSTS

• Electricity retailers must tell you how your rate compares to your region’s default reference price, so check your latest bill, retailer websites and comparison websites.

• If unsure, phone your electricity retailer to find out about your plan.

• Check if your retailer offers discounts for things such as paying for power in advance.

• Use technology such as smart meters and energy apps to find ways to cut electricity use.