A recent study commissioned by the St Vincent de Paul Society concludes that a large number of Australian households pay up to 50 per cent more for their electricity than those who have shopped around.
The details vary from state to state and supplier to supplier but astonishingly, the report reveals that only 10-20% of our electricity bills are actually for electricity generation.
So where else does our money go? Distribution – the network of poles and wires that bring the electricity from the generator to our homes – accounts for 30-60% of the cost. That seems reasonable: it involves huge infrastructure requiring constant maintenance.
But the retail margin component of our electricity bill varies from as low as 15% to as high as 45%, and averages around $600 per year across Australia. This isn’t all profit of course. Electricity retailers have costs too, but the report shows that energy consumers can save significant amounts by shopping around.
They found differences between standard pricing and market offers (including pay-on-time discounts) of up to $450 per year (for average consumption of (6,000 kWh per year, single rate).
Crucially though, the attractive market offers generally expire after 12 months. At this time – often without further notice – rates revert to ‘standard’ pricing.
So what should you do?
The good news is, there could be hundreds of dollars of savings to be made.
Firstly, you should shop around, just like you would for insurance or mobile phone plans.
Secondly you should diarise the expiry of the plan you choose – likely in 12 months time – then shop around again.
And with over 4,000 electricity plans Australia-wide (see right), and the best plan for you depending on your useage, we suggest you do it the easy way: grab your last bill and visit a comparison website. Here are a few which help you compare plans and save money;
What are your thoughts?
Have you saved by shopping around for electricity? Is there anything else you’d like to know about budgeting or debt management.
Join the conversation — leave a comment below and let us know what you’re thoughts are.