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I took one look at my energy bill and realised I could save $500 a year

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When I finally checked my electricity bill, a quick comparison showed me I was paying a $500 lazy tax. Here's how I fixed that.

I write about loans and money for a living. Every day I tell people "Don't pay the lazy tax: compare and switch." And when it comes to my home loan I practice what I preach. But I've ignored my energy plans for well over a year.

I knew it was a cheap deal when I signed up, but that was a while ago. And I knew I was probably paying too much, but how bad could it be?

How does $500 a year sound? That's how bad it was.

A very high monthly electricity bill finally prompted me to switch. There's only 3 of us in the house, but we feel the cold apparently and we use our electric heaters too much.

Naturally we'll find ways to cut down on our energy usage, but a detailed look at my latest bill showed me something else. My rates had increased, and a quick look at my provider's website showed it had much cheaper plans I could switch to.

But I was annoyed. At the provider, and myself. So I compared more options and vowed to find a much cheaper plan.

How to read your electricity bill and find a cheaper option

There are 2 parts to your electricity bill you need to focus on:

  • General usage. You pay this per kilowatt hour of energy you use. This is expressed in cents.
  • Supply charge. This is charged once a day. This is expressed in cents, although it can reach more than a dollar a day.

You save money by finding an electricity plan with lower general usage and supply charges.

Here's an outline of what my old plan was costing me per year and the one I eventually switched to.

To simplify, we're just looking at electricity, not gas. We'll calculate the daily usage charge assuming my household uses 5,000 kilowatt hours of energy per year (which is around the average in our state).

Old plan

Daily usage charge

  • Cost per unit: $0.31
  • Units: 5,000 kWh
  • Cost per year: $1,550

Supply charge

  • Cost per day: $1.20
  • Units: 365 days
  • Cost per year: $438

Total cost each year: $1,988

Then I compared plans from multiple energy providers, entered my address, and found a much cheaper one:

New plan

Daily usage charge

  • Cost per unit: $0.22
  • Units: 5,000 kWh
  • Cost per year: $1,100

Supply charge

  • Cost per day: $0.95
  • Units: 365 days
  • Cost per year: $346.75

Total cost each year: $1,446.75
Total saving: $541

That's $541 a year I can throw into my offset account.

Switch and save

Once I'd done the hard work of comparing, the switching was the easy part. I just gave the new provider all my details. Once they processed this, they took care of the switchover.

Because I'd been on my old plan for a few years it wasn't a fixed rate, so there were no fees for exiting the plan.

The most annoying thing, as is often the case, is just setting up a new account with another password.

I'm kicking myself for not doing this earlier. And I've put a big reminder in my calendar to do this all again in 12 months.

Paying too much on your energy bills? Compare electricity plans and switch.

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