Post on June 13th, 2015
Compare energy companies and reduce your electricity bill cost
There are plenty of tricks out there to reduce your average electricity bill cost. You can use energy efficient appliances, use most of your electricity during off peak periods (if you have such tariffs), and ensure your fridge seals are adequate, just to name a few.
But there is one sure-fire way to get a cheap power bill, and that is to compare and find a company who does it cheaper. At the end of the day the electricity and gas that’s coming through the lines and pipes won’t change, only the company that bills you for it. With so much competition out there for your business, you could end up saving up to 30% off your electricity usage charges.
This means that a quick electricity bill comparison using our online tool could save you hundreds. What’s not to love about that?
Understanding what makes up your bill
The key to comparing electricity retailers is to think of it as a long-term relationship; after all, you want to be with them for a while, and you want to be happy while you’re with them. You also want to get the most out of this relationship, so it’s important you know what’s important to you in a company.
You might feel more comfortable speaking to a customer service representative who knows your area and understands your needs, so you may want to find a company that’s locally owned and operated. Or, you may be doing everything you can to reduce your environmental footprint, so a company that sources their energy from a more environmentally-friendly power source might be something that matters to you. Whatever your needs, you’ll be able to find a company out there that thinks like you—but it’s important to work these out first.
So think about what matters to you, and do some research into the different electricity providers available in your area. We recommend reading customer reviews too. While some might be a little skewed (you can’t please everyone, after all), customer reviews are able to give you an idea of what people just like you are experiencing, so you can develop your own idea of how the company will be for you.
Understanding your charges
To really understand how to reduce your electricity bill cost, it pays (literally) to understand what makes up your charges.
To begin you need to understand the tariff, or pricing scheme, your home is on. There are a few general tariff types you’ll find:
- Single rate tariff – Your electricity gets charged at one single rate, no matter the time of day or how much of it you use. Single rate tariffs tend to be lower than other tariff types, and are useful for consumers who use most of their electricity during peak hours.
- Time of use tariff – A time of use tariff sees your electricity usage charge vary depending on the time of day. Peak hours, where you get charged more, are usually during the day and into the early evening. Off-peak hours will see your rate reduced, and are usually in the evening, through to early morning.
- Controlled load tariffs – Controlled load tariffs are special pricing schemes for large draw appliances that have their own electricity meter, so things like your electric hot water system, your pool pump, or underfloor heating (if you’re in a colder location). While these tariffs only apply to the one appliance, you can have multiple appliances at one property that all have their own controlled load tariff.
- Feed-in tariffs – This is only relevant if you’ve installed solar in your home. For a feed-in tariff, when you generate more energy than your home uses the remainder of this gets fed back into the electricity grid, and is available for other residences to use. You then get paid a small credit for each kilowatt hour that you supply.
The rate your supplier is charging you will be fairly easy to spot, but some of the other information may not make as much sense. Here’s what you’re likely to find on the back of your bill, and what it means:
- NMI: This is your National Meter Identifier, the number assigned to your electricity meter for your electricity account in Australia.
- MIRN: This is the Meter Installation Reference Number, which is used to identify your assigned meter for gas accounts in Australia.
- kWh usage: Your bill will list the total amount of electricity that your household uses in kilowatt hours, or kWh. 1000 watts are used per hour, so one hour is one kilowatt. The kilowatt hour usage will be documented for the amount that your electricity meter measures, across the entire billing cycle.
- Supply Charge: Also known as a “service to property charge”, this is what you get charged for being connected to the electricity grid—your charge for your supply. This is usually charged at a cents per day rate.
- Network Charge: In some cases, a retailer may add on a network charge to your electricity account, which will be shown as a separate amount charged on your bill. This may also be referred to as a distribution charge or SAC reflecting a network charge for the basic maintenance of poles and wires in your area, as well as for the delivery of electricity.
Now that you understand what’s involved in the charges on your bill, it’s time to dig a little deeper and understand your electricity use.
Understanding your electricity use
Understanding how much electricity you use, and the appliances using the most electricity, is a great way to work out how to save energy and reduce your electricity bill costs. The good news is it’s not as hard as it sounds. With a few simple calculations you’ll be able to get a rough idea of the cost of using each appliance—then it’s up to you to determine how to reduce your use.
Here’s how to calculate your electricity use:
- Use your latest bill to find out how much you’re getting charged per kilowatt hour. This is sometimes called a “unit” of electricity.
- Find out how much electricity your appliances use per hour, in kilowatts (kW). You can usually find this information on a sticker somewhere on the top or side of the appliance, or in the user manual. If it’s rated in watts, divide this number by 1000 to get its kilowatt rating.
- Estimate each appliance’s hourly running cost by multiplying the input power rating by the price per kilowatt hour you get charged for electricity. For example, if your washing machine uses 1500 watts per hour each a cold wash, and your electricity cost is 28 cents per kilowatt hour, you can determine that it costs 42 cents per hour to run your washing machine: (1500 ÷ 1000) x 28 = 42.
- Now you just estimate the average number of hours you use the appliance. Say you do five loads of washing a week, and each load takes 30 minutes; this means you use it for 2.5 hours. 2.5 x 42 = 105. This means it costs roughly $1.05 a week to run your washing machine in this manner.
So there you go: you should now be able to do a rough calculation of the electricity usage for each appliance, and work out where you can save on costs.
Now that you understand what makes up your electricity bill, and where you use your electricity, it’s time to start comparing electricity retailers and plans. You’ll be able to use this information to find a better rate with a company that suits you, and have a much better chance at cutting the cost of your electricity bill.
How to compare electricity providers
It’s time to get down to business, and start comparing providers and plans.
Here are some important questions to ask when looking at plans, so you can make a more informed decision—and save yourself some money:
- What are your Peak Rate/Off Peak Rate/Supply Charges? Get the full picture of what they charge for each type of rate, and compare this against when you use the bulk of your electricity. Be sure to find a plan that matches your usage habits, though—or if you can’t, then put some actions into place to change the amount of electricity you use.
- How much will you increase my rates each year in this contract? Most electricity companies will keep their rates in line with the CPI, but if they tell you that there’s no cap, we recommend you avoid these suppliers. This can be a sign they’re looking at increasing their prices in the near future.
- Do you charge a moving house or disconnection fee? Moving house is hard enough as it is, so make sure you’re not going to get caught off guard with extra charges if you do.
- Do you offer any discounts? With the amount of competition in the electricity market today, suppliers may be willing to offer discounts as a way to make their plans more interesting. You might be able to find discounts for paying your bill regularly on time, or for choosing paperless communication, or for setting up direct debit. But check the terms and conditions, and make sure it’s for the full life of your plan—or if they’re likely to remove the discount if you miss a payment.
- Will you give me a discount off the total bill or just the usage rates? This is also important to ask, as getting a percentage discount off your rate, as opposed to a cash credit on your whole bill, can make quite a difference when it comes to what you pay.
- Can you match or beat another company’s offer? Again, this question is thanks to the competition on the market. Your supplier might be willing to do this as a way to get you as their customer. It doesn’t hurt to ask them, and it allows you to get a better rate with a company who you prefer.
- Finally, remember to check your first energy bill after making the switch. Check to see that you’re actually getting the discounts or bonuses you were promised, and they’re charging you the right rate. It might sound paranoid, but you want to make sure you’re getting what you agreed to in your contract.
This might all sound like a lot, but asking these questions will get you what you need to know about the plan you’re looking at, and let you make a smarter, more informed decision. Knowledge is power, and with this information, the power is in your hands!
But if it all does sound like too much to think about it, then it helps to have someone in your corner who can do the hard work for you. That’s where we come in.
We’ll help you cut your electricity bill costs
ElectricityWizard allows you to quickly and conveniently compare electricity providers and plans in your area. One of our trained specialists can help you find the best available rates and options in your service region so that you can choose the plan that meets your needs, and saves you money.