If you live in South East Queensland, NSW, the ACT, Victoria or South Australia you can pick and choose from a range of electricity providers. This means savvy consumers in these areas may be able to shave money off their electricity bills. All you need to do is take the time to compare offers from different electricity and gas providers.
If you’ve decided it’s time for a change from your current provider but aren’t sure how to go about switching, the good news is it’s quick and easy. In fact, it can be done in a few simple steps and you won’t be without power at any point during the changeover.
Before we start busting some common myths and misconceptions, let’s take a look at how you go about changing energy suppliers.
1. Exit strategy
It’s a good idea to check whether there are any exit fees on your current contract before you start comparing electricity offers. You may be able to find this information on your electricity bill, or you can call your provider to get the lowdown.
If it turns out you will be charged an exit fee for switching, don’t panic. In some cases, the fee will be lower than the potential savings, but it’s still good to have this information up-front to avoid any nasty surprises.
2. Check your rate and usage
The next step is to grab your most recent electricity bill and check how much you’re currently paying.
Your bill will be made up of different charges and a tariff, which is the pricing structure used to determine your rate.
Depending on where you live, the charges shown on your bill may include:
- Daily supply charge. Also known as the service or fixed charge, this is the cost of supplying electricity to your property. It may appear as cents per day or dollars per billing period. It stays the same no matter how much electricity you use.
- Usage charge. This can also be called the consumption or variable charge and is the electricity you use. It will appear on your bill in cents per kilowatt hour (c/kWh).
- Demand charge. Demand meters measure the maximum rate of electrical flow (or current) at any one time during your billing period. The demand charge will be higher if your electricity use peaks suddenly, as it reflects the cost of the infrastructure needed to deliver the power in one big hit. If your electricity use remains relatively consistent throughout the day, you are likely to pay less.
Also, you may be billed under one of the following tariffs:
- Single rate. You pay the same rate for the electricity you use regardless of the time of day.
- Time of use. You pay different rates during peak periods, shoulder periods and off-peak periods. Shoulder periods are the times between peak and off-peak.
- Controlled load (or two rate). You pay one rate for your general electricity usage and a separate, generally lower, rate for energy needed to power a specific appliance – for example, an electric water heater or pool pump.
It can be handy when comparing offers to check how many kilowatt hours (kWh) you typically use in a billing cycle and, if possible, during peak seasons – i.e. winter and summer.
3. Compare the whole plan
The cheapest electricity plan will be different for everybody. It will depend on your circumstances, including where you live, your power consumption, and the distributor and available providers in your area.
With that in mind, getting a great deal on electricity and a plan that works for you isn’t just a case of finding the cheapest rates. Be sure to look at the big picture, including:
- Fees and charges. Are there any fixed costs or service fees? What are the late payment fees? Are there fees for exiting the contract or moving?
- Discounts and benefits. Are you eligible for any special introductory offers? Are there discounts for paying via direct debit or by the due date (if so, check whether the discount applies to the usage charges only, or is deducted from the total amount)? Do you get one free move every year?
- Billing cycles and options. Will your bills arrive monthly, bi-monthly or quarterly? Does the supplier offer an option to pay in instalments? How can you pay – through your bank account, by credit card or cash?
- How long is the contract? Are you locked in or free to exit at any time?
Speaking of contracts, you’ll also want to check the type being offered. In some areas you can choose between two kinds of offers – a standard retail offer and a market retail offer. A market retail offer is when electricity providers can set their own prices. This can help drum up a bit of healthy competition between retailers, but at the same time means the prices can change at any time – including after you’ve just signed up.
For any commitment-phobes out there, the good news is that many plans these days come with no exit fees, so you can switch electricity providers at any time.
As always, be sure to check the terms and conditions carefully before signing up for any contract.
4. Make the switch
When you’ve compared all the offers and found the best one for your needs and budget, the rest is easy – simply contact the provider in question and they will organise everything for you.
The switching process typically doesn’t take long, but it can vary across providers, so it’s a good idea to check.
Alternatively, if you’re working through a comparison site such as iSelect, we can arrange your sign up on your behalf.
Common myths and misconceptions
When it comes to switching suppliers, there are a few misconceptions floating around. Here are three common ones you may have heard:
1. They will have to turn off my electricity during the changeover
Don’t worry, you won’t be shivering through cold showers, sitting in the dark or missing your favourite TV show. Because you are only changing providers, not distributors, your electricity supply won’t be affected at all.
Your electricity distributor is the one actually supplying power to your property. It is responsible for maintaining the distribution networks, including electricity powerlines and power poles. Your distributor sells the electricity to providers, who in turn sell it on to you.
So, your new provider can access the same electricity supply as your old one, making changing as simple as flicking a switch, so to speak.
2. It costs money to switch
Not so – unless you have to pay an exit fee for leaving the contract early, switching is completely free. In some cases, the savings you’ll gain from switching are worth more than the exit fee anyway, so this is always worth weighing up.
3. A new power company means new wires or a new meter
Again, this isn’t predominantly true. Your new provider will be able to use the same equipment as your old one, so you won’t have to take the morning off work to wait for the installation crew. Although, please note some solar plans require installation of a new meter.