Switching to a cheaper energy plan is one of the best ways to save on your electricity bill.
For many people making the switch can be daunting that's why we've broken down some of the key things to look at when you're comparing energy plans.
Price, credits and rewards
Comparing plans by price might seem obvious at first but every household uses energy differently, so every bill is different. Because of this energy retailers can only display estimates which they will either show as an annual or monthly cost. The government has introduced a reference price to help customers compare electricity offers from multiple providers.
When looking at energy plans providers have some leeway in how they describe the reference price - it might look like any of the following:
- 11% less than the reference price
- 11% electricity discount guaranteed
- 11% discount
The cheaper the plan the greater the difference it is from the reference price. You can also use this information to see if a particular plan isn't a good deal because it will display messaging such as "equal to the reference price" or "11% more than the reference price".
The reference price was introduced to New South Wales, Australian Capital Territory, South East Queensland and South Australia in 2019 as a benchmark electricity price. Because of this, it's also called the Default Market Offer (DMO) as it acts as a price cap on how much you'll pay for your electricity bill if you don't switch to a new plan when your original offer expires. In Victoria, it's called the Victorian Default Offer (VDO).
Credits and sign-up rewards
If you narrow your choice down to two retailers who have similar prices see if there are any credits or rewards that pack in more value. Energy retailers want to stay competitive so they may offer sign-up credits (typically between $50-$75 per electricity and gas plan) and rewards points such as Everyday Rewards or Qantas Frequent Flyer points.
A few retailers even offer credit for referring a friend.
Tariff types
There are a couple of different tariff price structures for electricity plans. These determine how much you're charged for every kilowatt hour (kWh) you use.
There are four main tariff types you'll encounter:
- Single rate tariff. This tariff type is available to everyone and consists of one single usage rate and a supply charge. Every kWh your household uses is charged at the same rate, no matter what time of the day.
- Time of use tariff. This tariff is only available to households that have a smart meter installed. That's because on this tariff the day is divided into peak, off-peak and shoulder periods - each with its own usage charges. These are in line with when people use electricity the most and least. The exact periods are different between states and retailers but generally, the peak period is the most expensive period followed by shoulder and then off-peak. There's also the supply charge.
- Demand tariff. The least fun tariff, the demand tariff exists to encourage households with smart meters to use less electricity during peak demand times. It's calculated as the highest energy usage over your monthly billing period during peak times (which are measured in blocks of 30 minutes). It's a kind of penalty for how much demand you put on the grid. Sometimes demand tariffs are dictated by your energy distributor or in some cases you can opt-in to save money if you think you'll use less energy during peak times.
- Controlled load tariff. You'll only see this charge on your electricity bill if you have an appliance that runs on its own circuit. Think of something like your electric hot water system. The rates are generally an additional charge on top of other tariff types.
Your tariff type is largely determined by the set-up in your home. Having a smart meter gives you more flexibility with the choice between a single rate or time of use tariff as the main tariff type for your home. Demand and controlled load tariffs are generally are added on top.
Example: The configuration in your home in a cold climate might be a time of use tariff for your home with a controlled load for your electric hot water system. If you decided to install underfloor heating you would be required to pay for a second controlled load.
No matter which type of tariff you're on everyone also pays a supply charge. This is a flat rate charged each day of your billing cycle just for being connected.
Contract types
Electricity is tied to commodities and the price can be influenced drastically by how much energy is able to be generated and how much it costs to generate. If the price of coal goes up you can expect power prices to follow.
There are two types of electricity plan contracts available:
- Variable rates plans. These are offered by every retailer and are just about the only type you see a the moment. Like a variable home loan, prices are subject to change. Thankfully they generally only change every 6-12 months usually in January or July.
- Fixed-rate plans. Rarer these days, fixed-rate plans are usually available when the market has more certainty. A fixed-rate plan locks in your price for a period of time, usually 12 months. When they're available they can be a good option if you'd like to protect yourself from price volatility.
Fees and charges
While you're comparing energy plans you should be aware of a few fees and charges that can retailers might try and sneak past you:
- Credit card fees. Pretty standard for lots of goods and services these days but watch out for them if you don't like paying 1-2% in fees on every energy bill.
- Connection and disconnection fees. Slightly more complicated these fees are charged anytime a property is either connected or disconnected from the energy grid. They're charged by energy distributors and then passed on to you. Some retailers might absorb some of the cost and so their connection fees are lower. It's a good idea to pay attention to these fees if you're a renter who moves frequently as you can find yourself stung.
- Payment processing, dishonour and late payment fees. Miss a payment or forget to transfer money to your billing account? Some (not all) retailers include small charges like these so be on the lookout when comparing. Things like a $2.50 payment processing fee are just a nuisance but every dollar counts in this economy.
- Membership fees. A small few retailers such as EnergyLocals may charge an annual membership fee.
- Early exit fees. Most energy plans these days are no lock-in contract and retailers aren't allowed to charge exit fees. However, some exit fees may apply where you're on a fixed tariff or have equipment such as a solar PV system, battery or digital meter installed as part of your contract.
GreenPower and solar feed-in tariffs
If cleaner energy is something you're after then you'll want to pay attention to look out for GreenPower and if you've got a solar PV system installed you'll want to know about your feed-in tariffs.
GreenPower
GreenPower is a government initiative that allows households to support renewable energy generation. When you sign up for an energy plan you may have the option of adding GreenPower from 10 and up to 100%. GreenPower offsets your energy usage with the equivalent percentage being put back into the grid from renewable sources on your behalf. GreenPower isn't offered by all retailers and keep in mind that it will mean you'll pay a few more cents per kWh.
For a green and wallet-friendly solution consider energy retailers that are Climate Active carbon-neutral certified instead.
Solar feed-in tariffs
If you're looking to install solar or already have it installed you'll of course want to know how much a prospective retailer is going to pay you for any energy you generate but don't use. This is called a feed-in tariff and rates vary between retailers and states with some legislating minimum benchmarks.
Sometimes the feed-in tariff will be one flat rate for all energy you export back to the grid but some providers have different rates that are stepped e.g. you get 11 cents/kWh for the first 10kWh you export each day and only 6.2 cents/kWh for the rest.
A feed-in tariff that is above the benchmark for your state is generally a good place to start.
Other plan features
Outside of the main elements of an energy plan, there are a few other things to consider, especially if there's no clear winner on price alone.
- Mobile apps. If having an app to manage your plan or view your usage in real-time is important to you then look out for this feature when comparing plans. It's not usually something that is highlighted well so you may want to spend some time checking retailer websites or app stores. Bill prediction, solar management and the ability to submit your own readings are some of the things to look for.
- Monthly billing. Some people prefer to pay their bills in smaller equal instalments rather than wait each quarter dreading a large energy bill. Lots of retailers now offer monthly billing or 'bill smoothing' where they use estimates to generate one monthly charge. The exact amount you pay may change over time as you either go over or under the estimate.
- Ongoing rewards.Not as common, are ongoing discounts for things like movie passes, attractions, retail, restaurants and more. AGL, Origin Energy, Alinta Energy each have their own rewards programs, AGL Reward, Spike and Alinta Energy Rewards Shop.
Energy comparison FAQs
How does the energy market in Australia work?
The energy market in Australia is fairly complicated. Six states and territories participate in the National Electricity Market (NEM) which accounts for 80% of all electricity consumption in the country. This includes NSW, VIC, QLD, SA, ACT and TAS. Neither WA nor NT is connected to the NEM.
Across the NEM there are three main stakeholders:
- Generators. The coal, gas and renewable power stations.
- Distributors. Maintain the high voltage transmission lines that receive power from generators and the lower voltage "poles and wires" that deliver electricity to homes and businesses.
- Retailers. Retailers are the businesses that buy power on the wholesale market and then sell it to you. Most people will only ever need to deal with their energy retailer although you may report fallen power lines and gas leaks to a distributor. In case of an emergency always call 000.
In comparison to telcos, you can think of generators and distributors like network operators Telstra, Optus and Vodafone while retailers are comparable to MVNOs. Some of the larger retailers like Origin Energy also own power stations.
Which companies offer energy in Australia?
In Australia, companies that offer electricity and gas are known as energy retailers. Origin Energy, AGL and EnergyAustralia are three of the biggest and most well-known retailers.
Here's a list of energy retailers that currently offer plans to residential customers in Australia:
- 1st Energy
- Actew AGL
- AGL
- Alinta Energy
- Amber Electric
- Arcline by RACV
- Aurora Energy
- Blue NRG
- CovaU Energy
- Diamond Energy
- Dodo
- Energy Australia
- Energy Locals
- ENGIE
- Ergon Energy
- GloBird Energy
- Horizon Power
- Jacana Energy
- Kleenheat
- Kogan Energy
- Lumo Energy
- Nectr
- Origin Energy
- OVO Energy
- Powershop
- Red Energy
- Rimfire Energy
- Simply Energy
- Sumo
- Synergy
- Tango Energy
Note: This list may change from time to time as providers may pause offering plans to new customers due to current market conditions.
These are the most popular NBN 50 plans with WhistleOut users this week:
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#1
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Dodo
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Kogan Internet
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#10
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Flip
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Dylan Crismale
Digital Content Editor
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