Energy bills to fall from July: Here’s how to lock in your savings
July is right around the corner and so are $65 million in potential energy bill savings for residents of NSW, South East Queensland and SA. But, you may want to start shopping around before then for even cheaper energy deals.
Note: We've updated this article with new information on locking in your savings before 1 July.
Over 700,000 Aussies across New South Wales, South East Queensland and South Australia can save on their energy bills from 1 July. Together, the total amount of savings could amass $65 million or more.
We reported back in April that the Australian Energy Regulator (AER) had confirmed it would cut its reference price or default market offer (DMO) price in July. This is the price against which all other electricity rates are measured.
The drop in reference price could see your household or small business potentially save between $116 or $441 in annual savings respectively, depending on where you reside. This will particularly impact those 727,000 customers that are on a standing offer with their energy providers.
Unsure if you're on a standing offer or not? You can always check your energy bill or call up your provider to find out if you're on a standing offer contract.
You'll most likely be on one if you've been with your provider for a long while.
Here's a breakdown of household savings for each state:
- New South Wales: $53-$102
- South East Queensland: $53
- South Australia: $116
How can I save more on my energy bills?
If you're not after lengthy explanations, the key thing to remember is you should always compare electricity prices if you can.
AER Chair Clare Savage also put emphasis on this when announcing the latest price cap.
Most retailers have cheaper energy deals on offer, so shopping around remains the best way to get a better price.
But you might not want to wait until 1 July to start shopping around because you don't know how energy retailers will react to the July reference price cuts.
Let's assume your energy retailer is saying its plan is 25% less than the reference price. Now in July, it could do 1 of 3 things:
- Keep the same discount running and offer an even cheaper deal when the reference price is cut.
- Reduce the discount it's offering to 5%, for instance.
- Remove the discount altogether and get its price on par with the government's reference price.
By comparing energy deals before July, you could possibly lock in a heavy discounted rate for a year. Who knows if energy retailers will continue offering big discounts on their plans following reference price cuts.
If you're ready to start comparing energy prices, use our Energy Finder™ tool to get results within minutes.
Still confused? We hear you.
Now you're probably shaking your head at this point. You get that there are more savings to be had but what do DMO and standing offers really mean? And how can they help you compare?
We'll break down the jargon for you because these are important terms to understand if you care about the cost of your bills.
How does the Default Market Offer affect my energy bills?
The term Default Market Offer has been floating around since 2019 when the concept was first introduced. It's also often referred to as the reference price.
Savage says the DMO acts as a safety net to ensure Aussies get a basic service at a reasonable price.
It works by capping the price that retailers can charge for electricity on a DMO contract.
The DMO is not designed to be the most competitive deal but rather it is a safety net for customers who don't or can't shop around when it comes to their electricity contract.
If you're keen to compare prices to find yourself a better deal, then the reference price is a good benchmark to go by.
What does a standing offer mean and how is it different from a market offer?
Almost 800,000 residents in New South Wales, South Australia and South East Queensland are on standing offer contracts according to the Australian government.
Here's a quick overview of how they stack up against market offers.
You're probably wondering how you got on a standing offer in the first place. The simplest explanation is that your market offer expired and you're no longer getting any discounts or incentives.
The electricity rate on standing offers is set by the AER who imposes limits on how much can be charged for electricity.
It's a no-frills contract but the benefit is that by legislation, prices can't change more than once every 6 months. Also by law, your provider will have to notify you of any price changes in writing and before implementing the change.
I get the gist. Let's recap how I save more money on my energy bills.
As we briefly mentioned above, the best thing you can do to bring down the cost of your energy bill is to compare energy prices and then make a switch.
This will potentially beat the price drop from AER and give you higher annual savings (you can use the reference prices in the table below to compare):
|Total standing offer customers (December 2020)||2020-21 DMO prices||2021-22 DMO prices||Saving for average standing offer customer in 2021-22 from 2020-21||Estimated total savings|
|New South Wales (depending on distribution zone)||368,180 (11.1%)||$1,462-$1,960||$1,393-$1,907||$53-$102||$19,513,540|
|South East Queensland||175,453 (12.1%)||$1,508||$1,455||$53||$9,299,009|
|South Australia||68,873 (8.7%)||$1,832||$1,716||$116||$7,989,268|
Source: Australian Energy Regulator
All you need to start shopping around is to have your electricity bill in hand. You'll need your usage data to compare prices. We have a guide to help you make sense of your energy bill.