The magic words that could help lower your energy bill

Andrew Ho was already “beyond fed up” with ever-rising energy bills. Then he learnt his provider would be upping rates by 8 per cent from July.

It was the straw that broke the camel’s back for the father of two. Despite using rooftop solar panels on his three-bedroom home in Sydney’s Cammeray, and attempts to minimise his family’s power spend by shopping around, he was still facing bills totalling more than $1200 a year.

Andrew Ho and Alice Lum are planning to install a battery to help combat rising electricity prices.Credit: Janie Barrett

His monthly bill for June alone had already grown to $244, with several days of chilly temperatures yet to be factored in.

And so, from July 2, Ho will have a battery installed at his home, to capture the plentiful amounts of power his solar panels generate during daylight hours that have been otherwise going to waste.

The technology came within reach for him due to various schemes, chiefly the federal government subsidy that comes into effect from next month, meaning a battery set-up that would have previously required an outlay of roughly $18,000 to install will now cost him about $6000.

While Ho had considered ways to reduce his bill that didn’t require such a high upfront cost, being flexible with when his family uses energy was not a sustainable option.

“The kids are sensitive to the cold, so keeping the house warm is a must,” said Ho, who lives with his wife Alice and two children Eloise, four, and Reuben, one.

“In summer, we pay next to nothing to run our air-con, but it’s the inverse in winter, we keep heating on pretty much throughout the night.”

Ho had tried getting a better deal from his provider, efforts which had generated insignificant savings that had led to him switching between three energy companies in the past two years.

“We’ve had bill shock recently, we spoke to them on the phone, but they did not want to budge much.

“We feel helpless about future increases unless we take matters into our own hands by storing energy when it’s cheapest,” Ho said. “We decided we’re not going to be sitting ducks for whatever price increase the power companies throw at us next.”

Ho’s decision could prove a popular one in coming months, as Australians are hit with the latest wave of energy price hikes.

From July 1, the cost of energy in NSW, South Australia and parts of south-east Queensland will rise after the Australian Energy Regulator (AER) increased its price cap for electricity prices, having announced its default market offer (DMO) – a limit each financial year on how much retailers can charge customers and small businesses – in May.

In NSW, it’s a rise of between 8.3 and 9.7 per cent, depending on whether households have controlled loads – electricity used by a standalone item such as hot water systems. Small businesses could have prices rise by up to 8.5 per cent.

In Victoria, which has a separate regulator, the average increase across the state will be about 1 per cent, or $20, the regulator said, while small businesses’ average rise will be about 3 per cent.

While the DMO is a benchmark, companies are offering rates as much as 27 per cent lower in some jurisdictions, the AER has said, prompting a plea to consumers to shop around to get the best deal they can.

Australia’s three largest energy retailers have all announced price hikes. In NSW, Origin customers will face a 9.1 per cent rise, while those with AGL will get hit with a 13.5 per cent rise, and EnergyAustralia is proceeding with an 8.7 per cent hike, data collated by Canstar shows. In Victoria, AGL customers will face a 6.8 per cent increase, with EnergyAustralia’s rate rising by 2.3 per cent and Origin yet to confirm its changes.

Canstar’s data insights director, Sally Tindall, said the average household could face price increases of between $31 and $261 per year. “However, for bigger families, they could well be looking at hikes that are double this,” Tindall said.

Professor David P. Byrne, deputy head of Melbourne University’s economics department, said there are reasons behind the spike, specifically the higher cost to produce energy from natural gas, which is one fuel used to generate electricity.

However, Byrne echoed the calls from authorities for consumers to shop around, noting loyalty taxes are pervasive in the energy market and that often lower-income and time-poor workers were the ones who rarely shopped around despite standing to gain the most.

Byrne conducted a research experiment in which about 20 actors gathered in a makeshift call centre at Melbourne University and called up energy companies adopting a range of different personas, to see how price offers varied between those claiming to urgently need to connect their new homes and customers who tried to haggle with the companies citing lower quotes they’d received from rivals.

“Context and urgency make a big difference in the price you’ll get offered. Our research found if you tell the call centre you just moved into an apartment and need to get the lights on, you’re going to get a 2 per cent higher quote.”

However, discounts are possible if callers follow some key rules.

“If … you call them up and say you’ve done your homework, you know what the best prices are, and have patience to spend all day finding a deal, our research found that if they know you know the lowest price, you could get a 3 to 4 per cent reduction.

“Picture yourself in a market in Bali haggling with sellers; the electricity market is no different. The companies aren’t doing anything wrong, they’re just exercising market power, in the way most oligopolies behave.”

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