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Energy is a huge expense, with power costs alone consuming up to 6% of the disposable wealth of low-income households each year1. If you're looking to cut down your annual energy spend, this page will inform you about:
The first step to managing your energy bill is to understand where the costs are coming from, so you can start working to reduce them. Here are some of the main factors that affect your bill:
Switching providers: Is it easy?
From our research, the best way to save on energy is by switching your energy provider. Here's four energy saving ideas you could take, ranked by how much you can save:
If you haven't shopped around in a while, there's a chance you may have been put on a 'standing offer' by your retailer - this is a default plan which likely isn't the most competitive offer on the market. If not, there's also a chance your plans original discount / benefit has expired and your bill has increased.
According to ACCC's September 2020 energy report, residential customers on market offers are paying around 17% less than those on standing offers.
Over a year, this equates to $219 of savings for people using 4,000 kWh of electricity.
Based upon a report from Australia's Department of Industry, Innovation and Science, standby power use can cost the average household around $100 a year. Switching devices like air conditioners, game consoles and printers off at the wall instead of leaving them on in the background, you could cut down your annual energy bill.
The lower you set your unit's thermostat, the harder it has to work to cool the air. Raising the target temperature to 22 degrees from 20 degrees can cut 20% off your energy use, and your power bill. Again using our previous figures, that's a drop from $250 to $200, a saving of $50.
If you can shave an hour off your heater use each day, lowering it from 4 to 3, you'll save 25% on your heater's energy use over winter. Using our figures from the previous section, that will drop your bill from $183.60 to $137.70, saving you about $46.
According to Finder's data, the average basic panel heater uses about 1.7kW of energy per hour. Assuming you use that heater for 4 hours per day for all 90 days of winter, you'll have consumed a total of 612kWh of energy.
To convert that into the annual cost listed in the table, we assume that energy costs $0.30/kWh on average. Of course, that will vary depending on your plan and where you live.
612kWh (total heater energy use) x $0.30/kWh (usage rate) = $183.60 over winter
Some heaters are more or less efficient than others, so it depends on the type of heater you have. Under the same conditions, the average tower heater might cost you $213.60 for the winter, or an oil-filled column heater might drop your bill to $167.40.
Based on Finder's data, a 5kW rated air conditioner will consume 9.26kWh of electricity per day, if you run it for 4 hours at 20 degrees Celsius. Assuming you're running it every day during 30 degree summer afternoons, that adds up to 833kWh across the season.
If we assume energy costs $0.30/kWh, your total bill will then be what we see in the table:
833kWh (total aircon energy use) x $0.30kWh (usage rate) = $250 for summer.
"Standing offers" are the default energy plan you get put on if you don't purchase a specific energy plan, where you'll pay a government-regulated rate for your energy. "Market offers" are plans that you buy from a retailer like Origin Energy or AGL, which are usually cheaper than standing offers.
How much cheaper? A 2020 energy market report by the ACCC stated that the median price paid on market offers was 5.5c/kWh (17%) lower than on standing offers for residential customers. This is a saving of $219/year for the average residential customer.
The median effective price paid by residential market offer customers across the four regions was 5.5 c/kWh or around 17 per cent lower than residential standing offer customers, and 10.7 c/kWh or around 25 per cent lower in the case of SME customers (figure 2.1). This equals savings of $219 a year for a residential customer using 3,988 kWh from the grid.
Even when you're not actively using your appliances, they might be consuming power. Leaving something on standby rather than unplugging it or turning it properly off can use a considerable amount of power.
Devices can be in passive standby (off, but able to be activated by a remote control), or active standby (switched on, but not in use). Here's an example of standby power use for a handful of common appliances:
Appliance | Hourly standby power use (passive) | Hourly standby power use (active) |
---|---|---|
Game console | 5.4W | 44.9W |
Television (LCD) | 3.5W | N/A |
Laser printer | N/A | 8.8W |
Set-top entertainment box | 15.8W | N/A |
Total yearly energy use on standby | 216kWh | 470kWh |
Cost (Annual) | $64.80 | $141 |
Assuming you leave these appliances on standby all year and power costs 30c/kWh, just these few add up to $64.80 on passive standby, or $141 on active standby.
Apart from turning devices off, you can also invest in appliances with a higher energy star rating and efficiency to lower their power consumption.
The Finder app can send energy savings tips straight to your phone
So how can you save? Here are three steps to starting your energy saving journey.
Standing offers vs Market offers
You often don't need to settle for what the energy company is offering; there are ways to negotiate a better energy contract.
Here's some tips to ensure you get a good deal:
As long as you don't live in Tasmania, the Northern Territory, Western Australia or outside of south-east Queensland, you will have a choice of energy retailers. Even if you can't pick between providers, you'll have a choice of contracts with different types of rates.
You can use Finder's online energy comparison tool to help you find the providers and plans best suited for you, wherever you live. Remember to be careful when choosing a contract — if it doesn't match your lifestyle and needs, you could end up paying more than you would otherwise.
Finally, you can shorten your billing cycle to pay monthly. This won't drive down costs, but it can help you avoid large tri-monthly shock bills and help you budget more effectively.
Once you have a basic picture of your energy consumption, including when and how you use the most energy, you can go deeper into managing it:
Standby power is the electricity that's consumed by your appliances that aren't being used or when they are on 'standby'.
Standby power accounts for as much as 10% of overall household electricity usage and while most appliances only draw a small amount of energy on standby, the costs add up. Your digital home appliances alone could be costing you as much as $171.27 a year. Luckily, reducing your bill is as easy as flicking a switch.
Power's most expensive when everyone else is using it, usually from 7am-10pm daily. Here are two ways to profit off consuming power when no one else is:
Aside from making sure you're on a better value plan, there are a few things you can do to ensure you save on energy during the COVID-19 pandemic.
If you are on a "time of use plan" – as in, your provider charges you more during peak periods and less during off-peak periods – plan your energy use around this.
For example, do your washing early in the morning or late at night (off-peak) if possible, or at the very least, avoid doing it during the evening.
As an example, here are the off-peak hours for customers in the Ausgrid region (winter):
Period | Time | Rates |
---|---|---|
Peak period | 5pm to 9pm | Most expensive |
Shoulder period | 7am to 5pm | In between |
Off-peak period | 9pm to 7am | Least expensive |
Picture: GettyImages
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