Ever opened a power bill and found it was higher than expected? That’s bill shock. Receiving a high bill for your energy can be stressful, so it’s important to know what to do if this happens to you.
How should I deal with a higher-than-usual energy bill?
If you receive a bill for your electricity that’s more expensive than expected, it can be hard to know what to do next. We’ve simplified the process into three easy-to-follow steps.
Step one: Check whether it’s an estimated or actual meter reading
Your energy bill is calculated using your energy meter to measure how much electricity or gas your household has used. If your meter reader cannot access your meter or has not given the meter information to your energy retailer, you will be provided with an estimated energy bill. This will be clearly stated on your energy bill with an “E” or “estimated”.
An estimated bill may assume you’ve used more power than you have. If this is the case, you may be able to contact your retailer and provide your own meter reading to receive a revised actual bill. If it is already an actual bill, it will be denoted with an “A” or “actual.”
The following is an example of an actual electricity bill and estimated gas bill:
Step two: Consider your finances
If your bill is accurate, then the next step is figuring out if you can afford your energy bill. This might involve reconsidering your current budget to put more money away to pay for your energy bills.
If you can’t afford your bill, contact your retailer as soon as possible to discuss your options. You may be able to go onto a payment plan, so you don’t have to pay your entire bill at once or be eligible for financial hardship assistance.
Step 3: Plan ahead for the future
Having a plan for future unexpectedly high energy bills can take the spark out of bill shock. You may want to put more money away towards your electricity and gas bills every week or month so you have a financial safety net. If you struggle with large quarterly bills, you could also ask your service provider if you can pay your energy bill monthly to make the cost more manageable. This is commonly known as “bill smoothing”
How to prevent getting zapped from bill shock
While you might not always be able to avoid energy bill shock, there are ways to manage your energy usage and potentially slash your energy bill.
- Compare options for your energy retailer. One of the simplest ways to lower your gas or electricity bills is to find a retailer with a more efficient energy plan. We help Aussies compare gas and electricity prices across various retailers to find an energy plan to match their budget.
- Evaluate your energy usage. Knowing which appliances in your home use the most electricity can help you understand where to make usage changes to decrease your electricity bills. There are devices and apps that monitor your electricity usage in the home. If you’re on a time-of-use tariff, ensure you’re only using heavier energy usage appliances (e.g. dishwashers, washing machines) during off-peak hours to lower costs. Check with your retailer for time when off-peak rates are available.
- Upgrade your appliances. Appliances with high energy ratings can be more energy efficient. Our guide to electricity energy consumption shows the cost difference between high and low-rating appliances and how buying energy-saving appliances can lower your energy bills.
- Consider solar power. Solar power can help save you money in the long term. Using your own solar generated power means you don’t have to pay for power from the grid during the day when generating your own power, but will still need to factor in your electricity usage at night. You can further increase your savings by using stored solar energy if you have a battery. Solar concessions and rebates are available to help households switch to a solar-powered system. If you already have solar power, you should compare solar feed-in tariffs to ensure you’re getting the best deal on any solar energy you send back to the grid.
- Energy rebates and concessions. If you have a concession card or are suffering from financial hardship, you may be eligible for a concession on your energy bills. Read our guide for a list of available concessions and rebates in each state.
What factors affect the cost of your energy bill?
Now you know how to avoid bill shock, but why does it happen in the first place? It comes down to several factors, and many of them can be avoided.
Personal household factors
Changing your house design or even where you sit when you work from home could be contributing to your household energy costs.
- Lifestyle. You and your household’s energy choices cause the most significant impact on your bill. Often, changes like working from home or adding new people to the household may have a noticeable effect on your power bill.
- House design. If you’ve just moved into an older property, your energy bills may increase as the structure is less efficient at naturally managing hot and cold weather. Similarly, if your home doesn’t take advantage of available temperature control options, you may require artificial heating and cooling to compensate, pushing up your energy bill.
- Heating and cooling. When experiencing extreme heat or cold, households often rely on internal heating and air conditioning. In fact, heating and cooling is the biggest consumer of energy, accounting for approximately 40% of the average Australian’s energy bill.1
There are also factors outside your control that can affect your energy bill. While you can’t do anything to change these, knowing what influences the energy market can help you predict when your bill may increase so you can plan ahead.
- Inflation. One cause of price increases is economic inflation, where the value of goods and services are targeted to increase by 2-3% per year. Inflation can affect the general cost of living in Australia, not just your power bill, making it even more important to cut costs where you can.
- Network costs. There is a cost associated with transporting energy from generators to your home. This cost is picked up by the distributors and passed onto retailers, who then pass it on to you.
- Wholesale costs. If any generators have an issue and go offline, the lower energy supply to the grid may mean the wholesale price is temporarily increased. In this case, some retailers may not be able to afford to continue to sell energy and withdraw from the market, decreasing the amount of competition in the market.
- Government influence. As the Government continues to invest in renewable energy sources and plans to phase out the majority of fossil fuels, it can create a more volatile market that influences energy prices. Government regulation may also interfere by placing price caps on energy, such as the Default Market Offer in Victoria, or fully regulate the market to help maintain affordable energy costs.
- International influence. Factors such as international conflicts, disasters and pandemics can create shortages of energy and raw materials that push up power prices. There is also the rising costs of fuel to drill and transport LPG gas.
Top tips for preventing bill shock from our Head of Energy, Meredith O’Brien
- You should compare your options. Services like our electricity comparison tool allow you to compare your current plan against an array of others on the market. As well as prices, you can see if any discounts are on offer and if you can take advantage of them.
- Being aware of the appliances you are running, when you’re using them and how often they are sucking power is a good way to combat bill shock. Adjusting your usage can result in significant savings.
- If you are struggling to pay your bills, speak to your energy retailer. They will have payment options such as bill smoothing or hardship plans to help you manage your budget.
Compare providers and switch
If you’re consistently spending more than expected, it could be time to compare providers and think about switching. Energy retailers are highly competitive and regularly advertise new ways to provide customers with a good deal. Start the ball rolling by comparing here.