Did you know that Australia has one of the world’s most expensive electricity markets? For more than a decade, electricity costs have been steadily rising, outpacing inflation. Does it feel like you’re paying about 50% more on your bill now than you were 15 years ago? That’s because you actually are. Electricity market deregulation (i.e. going from government ownership to privatisation) was introduced in 1998; the intention of the government was to take a step back and let a competitive market drive down prices. But it hasn’t quite worked like that; the ACCC reported in 2018 that the market was “uncompetitive” and “unaffordable”.
“Energy prices are, quite simply, way too high in Australia. While there have
been improvements, there is more to do… The industry must shoulder an
important part of the blame for where we are now.” – ACCC Chair Rod Sim
On the upside, the Government’s now taking a “big stick” towards energy market misconduct, and things are getting gradually better. The market is much more competitive now; the AEMC (Australian Energy Market Commission ) finds that consumers who do compare energy prices can save hundreds of dollars. In fact, last year they found that switching from the standing offer to the cheapest plan can save you ~$522/year!*
So, why isn’t everyone doing it? Barefoot Investor Scott Pape describes this as a “lazy tax”, but there’s more to it than that. Generally speaking, there are two obstacles: time involved, and some difficult-looking concepts. Let’s address the first obstacle first.
I don’t want to spend hours researching electricity!
Before you buy a new computer or a game console, you’ll likely spend hours researching first. And those things are fun and, well, “sexy” purchases. It’s hard to get that excited about electricity. But actually, there are electricity price comparison websites that let you compare electricity prices at a glance. you’ll get electricity quotes in minutes; instead of Googling what’s available in your area, and ringing up a dozen call centers. Urgh.
There are many of these websites out there, some of which look a bit dodgy! So, some important things to look out for are:
- Do they only list dollar-value estimated prices (or worse still, star ratings)? Or do they include the main conditions of the contract? A plan that’s cheap for your neighbour might not be cheap for you.
- On what basis are they estimating that dollar-price? Is it based on information they gathered from you first? For example, how many people are using power in your home? A family of four uses a lot more power than a single person!
- Do they charge you anything to use their service? Because they shouldn’t! There are many websites that provide this service free of charge.
- Will they start the ball rolling on the connection process for you? This streamlines the process and makes things a little easier. There are various Government comparison websites that will let you compare utility plans. But, as you can imagine, there’s paperwork involved in organising partnerships with commercial providers. That must form a pretty big barrier to action, whereas a quality non-government website can go the extra mile.
So, you can get quotes from a dozen or more electricity providers! All you need to provide is your postcode and a few bits and bobs of information. If you’d like to know more, Econnex offers easy at-a-glance electricity provider guides in these states:
- Electricity Providers NSW
- Electricity Providers Victoria
- Electricity Providers QLD
- Electricity Providers South Australia
Obstacle #1, sorted. What about Obstacle #2? Well, it’s not as hard to understand the conditions of electricity plans as you might think. You’ll find a great, short-and-sweet guide to understanding electricity conditions of contracts over at EnergyMadeEasy’s About Energy Plans. From peak/off-peak, and usage charge to supply charge, and more, made simple. it’ll take maybe 10-20 minutes to understand what plan is right for you. Knowledge is power!