When you’re searching around for a new energy plan, it’s easy to be distracted by the shiny offers and discounts providers might promise. The question is, which of these offers are marketing and which are genuine, useful discounts?
To help you navigate the world of energy discounts in pursuit of the best deal, we've put together a short guide with everything you need to know.
What types of energy discounts exist?
While the sheer number of energy discounts out there from different providers may seem complicated, they mostly fall into just a few different categories. Usually, you'll be looking at a conditional discount, something which only applies when a certain condition is met. Here's what common discount types exist:
Direct debit. Letting your provider pull your bill directly from your bank account at payment time saves them administrative work and can save you money.
Paperless billing. Don't mind receiving your bill in your email inbox? Paperless billing can save you from paying a surcharge for the extra time and money the company has to spend printing and mailing your bill.
Pay on time discount. Pay your bill on time, every time, and you might be eligible for one of these discounts. Watch out, though, since if you're late on a couple of payments you might not end up saving much at all. Your discount could be cancelled and you could be hit with large dishonour fees.
Sign up or limited term discounts. When you sign up with some providers, they may offer you a big discount that only applies for, say, 12 or 24 months. Make sure the discount is worth it with the period offered.
Powershop, Powershop Australia Lumo Energy Energy Locals
Last checked December 2019.
1. Credits or discounts?
Some providers will offer their 'discount' as credits. So for example, Sumo Energy offers:
$100 in credits on your electricity account over 24 months if you pay on time.
Read the T's and C's
One thing to be aware of however is the terms and conditions when it comes to credits. In the Sumo Energy example, they will pay back their credits every third monthly bill.
The amount you get back may also vary based on the type of discount you are attempting to receive e.g., Bundle, Pay on time, etc.
The information above was last checked as correct on October 2019.
Rates first, discounts second
Discounts are appealing because everyone likes to feel like they've saved, but you should never purchase a plan based on discounts alone. What matters most is the rates (at which you're being charged for electricity) that the company is offering. This is for two reasons.
1. Discount length
First, some discounts (commonly phrased as 'benefits') are temporary. A company may offer you a hefty discount when you sign up, bringing what you're paying down below a competitor with a lower base rate. However, this decrease could evaporate 12 months later, leaving you stuck in a plan where you're now paying way above what you could get from another provider.
2. It might be conditional
Remember, you'll need often meet the condition to unlock the discount. This penalises you (and sometimes quite a lot) if you don't meet the conditions.
Be careful of large conditional discounts
Consider whether you'll be able to always meet the condition. If not, you might find yourself paying lower rates for a while and then seeing your rates skyrocket up above competitors because you missed a payment, for example. It's entirely possible you're better off with another plan without the conditional discount.
...retailers often advertise large conditional discounts and many consumers end up paying a much higher price when those conditions are not met. These 'penalties' provide an excessive benefit to retailers. - ACCC, 29 March 2019
And as usual, check the rates. You might be paying a low flat fee for your electricity, but have high usage and supply rates. Deals may not always be as good as they appear at first.
What is the reference price?
The reference price is a benchmark price set by the Australian Energy Regulator to help make understanding prices easier in New South Wales, South Australia and South-East Queensland.
It's the highest a retailer can charge a customer on a standing offer.
The state of Victoria uses a slightly different benchmark called the Victorian Default Market (VDO) offer.
You'll often see the reference price mentioned with discounts to make it easier for you to understand how much you are saving.
Disclaimer: The following price estimates are a general guide only. Prices are based on a residential customer in NSW who consumes 3,900 kWh a year on a single rate tariff in the Ausgrid network. Prices last checked on April 2020 and are subject to change. Always check the providers site before applying.
Disclaimer: The following price estimates are a general guide only. Prices are based on a residential customer in Melbourne, Victorian who consumes 4,000 kWh a year on a single rate tariff in the CitiPower network. Prices last checked on April 2020 and are subject to change. Always check the providers site before applying.
Disclaimer: The following price estimates are a general guide only. Prices are based on a residential customer in South-East Queensland who consumes 4,600 kWh a year on a single rate tariff in the Energex network. Prices last checked on December 2019 and are subject to change. Always check the providers site before applying.
Disclaimer: The following price estimates are a general guide only. Prices are based on a residential customer in South Australia who consumes 4,000 kWh a year on a single rate tariff in the SA Power Network. Prices last checked on December 2019 and are subject to change. Always check the providers site before applying.
The following price estimates are a general guide only. Estimated prices are based on a residential customer in Canberra, ACT who consumes 5499k kWh a year on a single rate tariff in the Evoenergy network and only one plan per provider is shown. Estimated prices include conditional discounts (if any). Any plans with special eligibility requirements are excluded. Prices last checked on December 2019 and are subject to change. Always check the providers site before applying.
Important: Providers may change or remove discounts at any time. Always check the provider's website for what discounts are available.
Sam Baran is a writer for Finder, covering topics across the tech, telco and utilities sectors. They enjoy decrypting technical jargon and helping people compare complex products easily. When they aren't writing, you'll find Sam's head buried in a book or working on their latest short story. Sam has a Bachelor of Advanced Science from the University of Sydney.
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