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Avoid an end-of-quarter energy sting

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Australians must understand their energy contracts to avoid bill shock 

Despite the likely carbon tax repeal, consumers are cautioned that with energy costs increasing, they should better understand their contracts to avoid being burned by a higher-than-expected quarterly bill.

Abigail Koch, spokesperson at comparethemarket.com.au, says, “While energy companies may pass on savings to consumers if the Senate repeals the carbon tax, anyone anticipating a reduced energy bill this quarter is in for a shock. Many energy retailers increased prices on 1 July to cover the rising cost of generating electricity; and this increase far outweighs any potential carbon tax saving.

“Combined electricity and gas bills have risen by as much as 85[1] per cent in some states over the last five years, leaving 84[2] per cent of Australians worried about their energy bills. One way of tackling high bills is to understand what you’re being charged for and how you can make it more affordable for yourself and your family.”

Abigail provides 7 tips on how you could make savings on your energy bill simply by better understanding your contract.

  1. Know your contract ‘type’. If you’re on a standard contract, then chances are you’re missing out on discounts, rebates and benefits. “Ask your retailer to move you onto a market contract, but only if they’ll let you avoid any exit fees should you wish to switch contracts again,” says Abigail.
  1. Recognise the right discounts. Keeping an eye out for discounts is a good way to keep costs low, but be aware some discounts only apply in particular circumstances such as paying bills on time. Abigail says,“Make sure you look out for contracts with unconditional discounts which you’ll receive no matter what your actions are.”
  1. Think about block tariffs. A block tariff contract charges a lower-than-standard rate up to a particular energy level, and then prices increase slightly in the next ‘block’, and so on. “Block tariff contracts may suit people who don’t use too much energy,” says Abigail.
  1. Stay off peak. If late-night laundry is your thing, then an off-peak tariff may be for you. Off-peak rates are charged when electricity usage is at its lowest, resulting in lower costs for you. In most cases you’ll require a time-controlled meter to start up this type of contract.
  1. Know when incentives are masking higher rates. “Movie tickets and frequent flyer points are attractive, but some energy retailers use them to entice households to sign up to their plans when there could be cheaper contracts out there. Take your time to weigh up costs against benefits before signing,” says Abigail.
  1. Learn about penalties upfront. Penalties for missed payments vary, but if you’re struggling to pay on time, it’s best to inform your energy retailer. “You may be able to negotiate paying smaller amounts over a longer period. Avoiding payments altogether can lead to late-payment penalties, disconnections and reconnection fees,” says Abigail.
  1. Are you on the most cost-effective contract? Make the most of free online comparison sites such as comparethemarket.com.au, to give you a clearer idea of whether there’s a better option out there for you

[1]St Vincent de Paul National Energy Market report 2013

[2]Choice Survey of Community Views on Energy Affordability 2013

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