How to choose an energy plan

How to choose an energy plan

Most Aussies buying electricity and gas would understandably want to pay as little as possible. However, there are other factors to think about when choosing an energy supplier. Luckily, customers can approach such a comparison in a couple of ways. One, they can consider their household situation and past electricity and gas use against market quotes when deciding which energy provider to choose. Alternatively, they can use their neighbours' energy plans as a reference and go with either the preferred energy provider for their postcode or another competitive offer. Regardless of how you approach it, paying attention to the details of various energy plans can help maximise savings.

How to choose between an energy provider's contracts

Most Australian energy providers’ plans involve either a standing contract or a market retail contract. The terms that retailers can offer through these contracts are specified by the National Energy Customer Framework (NECF). Further, the pricing offered by retailers must follow the Australian Energy Regulator’s guidelines, particularly for electricity. As the electricity market is deregulated almost everywhere in Australia, retailers can vary the prices offered under market retail contracts. However, the prices for standing offers can’t be changed as frequently and cannot exceed the upper limit defined by the AER’s Default Market Offer (in New South Wales, Southeastern Queensland and South Australia) or the Victoria Default Offer.

Typically, retailers may offer several market contracts, each packaged with different discounts or rewards. When comparing these offers, customers should check: 

  1. Whether there are any incentives for taking a longer-term contract lasting two to three years.
  2. Break costs, which could mean paying additional charges and can prevent customers from switching to a more suitable provider.
  3. If the rates offered are fixed for a specific period or variable.

Energy laws in Australia also require energy retailers to encourage customers to make informed decisions by providing information about reference prices, enabling them to review their plan on comparison websites and permitting comparisons between the different rates offered. Customers who don’t receive relevant information should ask their retailer for it. Usually, energy providers may list their rates on their website along with a comparison with the reference price. Customers can also get a better sense of current energy prices by checking plans and prices from various energy suppliers.

How to choose between different electricity and gas prices offered by energy providers

There are generally two kinds of charges you’ll pay for gas and electricity: supply charges and usage charges. Supply charges are fixed costs and include the costs associated with distributing and retailing electricity or gas, as well as costs related to environmental schemes (for electricity). These charges can often exceed the usage charges or the cost of the energy used by the household. Customers may not have much control over the supply charges, but they can bring down usage charges by opting for a different electricity plan. For instance, a controlled load tariff allows those customers who can restrict a bulk of their electricity usage to “off-peak” or low demand hours to enjoy a lower tariff for their total electricity consumption.

Depending on their heating needs, customers could also choose to switch to using gas-based appliances and avoid paying higher electricity bills. Such a switch can be particularly helpful in places with colder winters, such as the Australian Capital Territory. However, customers should make sure they are getting a suitable price for their gas connection as well, possibly by considering the cost of electricity and gas from the same supplier. Equally, installing solar equipment can help customers take advantage of solar feed-in tariffs and receive credits for the unused electricity they send back to the grid.

Did you find this helpful? Why not share this article?



Money Health Newsletter

Subscribe for news, tips and expert opinions to help you make smarter financial decisions

By signing up, you agree to the RateCity Privacy Policy, Terms of Use and Disclaimer.


Learn more about energy

How to find cheap gas and electricity?

One of the best ways to find cheaper gas and electricity plans is to compare the plans offered by various service providers in your area. You can compare any perks or discounts available from the retailers and the standard costs and fees. You’ll also be able to calculate the estimated monthly, quarterly, and annual costs.

Be careful choosing based solely on these upfront perks or costs, however. These discounts or lower usage perks may end when the contract or benefit period expires on your current plan. When you compare online, you can often find a better plan. 

Your total energy bill includes supply and usage charges, which vary from one provider to another. You can shop around online to find a retailer that offers competitive prices on these charges and any other fees. Discounts can help reduce your bill, and it makes sense to review your bill and think about how to find cheaper gas and electric providers at least once a year.