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More Aussies believe switching energy saves money, but won’t make the leap

4 min read
7 Jan 2019

With the price of power sparking outrage in many household budgets, a majority of Australians are questioning their loyalty when it comes to energy.

A recent survey commissioned by comparethemarket.com.au revealed that 54% of Aussies believe they could be saving on their power bills if they switched to a different energy provider. And yet, nearly half of respondents hadn’t switched in years.

With fierce competition in today’s energy market, there’s plenty of forces driving motivation to switch electricity and gas plans – but it’s not necessarily spurring any such action.

But, just how much have energy prices actually gone up?

According to the Grattan Institute, household electricity bills had risen by up to 20% in 2017.

Why aren’t more Australians switching energy plans?

Compare the Market revealed that almost three-quarters of Aussies believe their energy bills have noticeably increased over the last three years. Despite these significant numbers, consumers are still somewhat reluctant to seek out a better deal. In fact, nearly half of survey respondents stated they have not switched in over three years, or never switched at all.

Australians’ reluctance to switch providers is primarily due to:

  • concerns around exit fees
  • confusion about switching providers
  • having their energy disconnected.

So, when is the right time to switch energy providers? Well, it all depends on the plan a customer has in place with the current provider, and whether or not there are termination fees for cancelling the contract early.

Average electricity and gas bills across Australia

In the quarter of September 2017, the Australian Bureau of Statistics (ABS) uncovered the average weekly household costs of electricity and gas across each capital city.

Electricity:

SydneyMelbourneBrisbaneAdelaidePerthHobartDarwinCanberraWeighted average of capital cities
$38.69$28.85$33.57$44.10$31.76$41.28$45.50$29.13$34.57

 

Gas:*

SydneyMelbourneBrisbaneAdelaidePerthHobartDarwinCanberraWeighted average of capital cities
$10.20$22.27$4.02$14.26$13.52$5.60$2.07$25.40$13.81

*Includes other household fuels

What to look for in electricity plans

When searching for cheaper energy, it’s important to understand the costs and charges included in a bill. While choosing a plan with the highest discount might seem like the better option, it’s not necessarily the cheaper option, as consumers may be receiving a large discount on a higher base rate, which could be more costly than a smaller discount on a lower base rate.

In most cases, energy charges are comprised of two core components, supply charges and usage charges. Supply charges are the fixed daily cost of electricity or gas, and usage charges are the variable costs based on the amount of energy a household consumes.

Some other key parts that contribute to the average energy bill are:

  • Peak rates. An increased rate which is charged for energy consumption during peak periods of the day (generally 2pm-8pm weekdays).
  • Shoulder and off-peak rates. A reduced rate for energy consumption during the less busy times of the day Shoulder rates are usually between 7am-2pm on weekdays and 8pm-10pm on weekends. Off-peak rates are all other times.
  • Tariffs. Fixed or flat rates equal the same amount charged to your bill, regardless of the time of day. Time-of-use prices vary depending on what time of day you’re using energy. A controlled load is a lower rate applied during off-peak hours (generally overnight) and a solar feed-in tariff is a payment that your energy retailer credits to your account for any excess electricity generated by your solar panel system.
  • Connection fees. If you’re moving house or are a new customer, there may be account connection fees applied when transferring an account to a new address.

To take advantage of electricity plans with peak and off-peak rates you will need to be connected to a ‘time of use’ tariff. However, these plans will not be available unless you have a smart meter installed at your property.

It’s also worth pointing out that not all regions across Australia have flexibility when it comes to switching. Customers in New South Wales, Victoria and the Australian Capital Territory can choose from different energy providers, while residents in Northern Territory, Western Australia, regional Queensland and Tasmania are regulated, meaning customers cannot choose their retailer (restrictions may apply).

Based on these average annual household electricity and gas bills across the country, and an understanding of energy bill charges, customers can determine how their yearly charges stack up. Depending on where residents live, and if switching is an option in that area, it may be worthwhile shopping around for a better energy deal from a range of providers through Compare the Market.

Sources:
Survey conducted by Pure Profile 2018.
Grattan Institute, ‘Get Used to High Electricity Prices’, 2018.
Australian Bureau of Statistics (ABS), 6473.0 – Consumer Price Index, 17th Series Weighting Pattern, 2017.
Australian Energy Regulator (AER), State of the Energy Market, May 2017.
Australian Government, Your Energy Savings, Off-Peak, Smart Meters and Time-of-Use Pricing, n.d.
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Written by Jared Mullane

Jared is a journalism graduate who has a knack for writing quality content that's easy to digest. When he isn't simplifying the intricacies of financial jargon and fine print, he'll more than likely be booking his next overseas adventure. Additionally, Jared is a meticulous listener who thrives on helping others.

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