Time to read : 4 Minutes
Energy bills have skyrocketed in the past six months, putting serious pressure on household budgets. A massive 47% of us say that affording the hike in electricity prices is now a major cause of financial stress.
But what if I told you that you could wipe out the recent price rise in just a few minutes, potentially locking in a discount of up to 20% for the next 12 months?
Right now, plenty of the smaller energy retailers have introduced some of the most aggressively discounted plans I’ve seen in about three years.
That’s great news for anybody struggling with rising household bills. It’s not an exaggeration to say that some people could cut $500 from their energy bill right now - at least that’s what the ACCC think, and who am I to argue?
But why are we suddenly seeing an influx of discounted offers and how do you get them? Let me explain?
Why low wholesale energy prices are driving down our bills
A little over a year ago, the federal government had to step in to cap the energy market. Wholesale prices were skyrocketing and there was a real risk that energy bills would become seriously unaffordable.
Today, the picture couldn’t be more different.
Victoria’s average wholesale price in 2024 is currently $37. Last year it was $100.
The average wholesale price in both NSW and QLD last year was $145. As I write, it’s currently $72 and $67 respectively.
So, great, it costs less to produce energy in Australia right now. But what does this mean for the average customer?
Essentially, it means that some of the smaller retailers - who are a little bit more exposed to wholesale price changes - can suddenly lock in a very cheap price.
That means they’re in a great position to try and acquire more customers - the likes of you and me. And to do that, they’ve launched some seriously good deals.
How good?
Across NSW, Victoria and South East Queensland, we’re seeing offers that would save households on a Default Market Offer or the Victorian Default offer anywhere between $359 - $386 if they switched today.
South Australia, sorry, your savings are only around $35. But every little helps, right?
Yes, but… the nature of the energy market means these deals could be pulled at any time.
How long will cheap energy plans stay on the market for?
The short answer is it’s impossible to know.
For me, the Australian energy market is a bit like driving across the Nullarbor Plain in a 25-year-old ute with no spare tyre, as Jack Kotlyar, the Head of Green Transport at EnergyAustralia, might say.
As long as everything works well, progress is smooth. But it just takes one little issue for the driver to get into serious trouble.
Right now, conditions are perfect for low prices. Temperatures are lower than expected and this summer has been a bit wetter than predicted, which means there’s less strain on the grid. Power stations are working as well as they can be and the increase in rooftop solar panels combined with plenty of sunshine is pumping more energy into the system.
But it only takes one of the below to send spot prices upwards and for the smaller retailers to pull their offers:
An extended major heatwave that puts extra pressure on the grid.
Several of our coal power stations - which are mostly over 40 years old - going offline or breaking down.
A major natural disaster like a flood impacting the coal supply chain
Global events like war or Covid affecting the worldwide energy market.
You don’t have to be a fortune teller to know that these are all very realistic. And if they all come at the same time then your creaky old ute has just suffered four tyre blowouts.
What’s the best energy plan for me right now?
Look, every household is a bit different as is every state: Bega, Bondi, Brisbane, Ballarat, and the Blue Mountains are all served by different energy distributors. It varies from distribution zone to distribution zone.
Plus, some people might want a green energy plan, others may want a good solar feed-in tariff. A big house where mum and dad work from home while three kids suck up the internet will have different needs from a solo apartment dweller who’s rarely at home.
There’s even one retailer currently offering 3 hours free a day.
It’s all relative. Sometimes one of the big Tier One retailers like Origin, Energy Australia or AGL will be the right plan. Sometimes it’s a smaller provider like Sumo, Ovo or Dodo.
And if you use an energy broker like Compare Club, we’re legally obliged to give you the best deal from our panel.
The bottom line
This January has some of the best value plans I’ve seen since pre-pandemic times. With cost-of-living pressures unlikely to ease anytime soon, reviewing your energy bill could be the quickest way to put hundreds of dollars back in your bank account.
If you’ve not reviewed your energy plan in over a year, there’s a good chance there’s a cheaper deal out there.
A LOT of us are currently overpaying by hundreds. The ACCC reckons more than half of households are paying Default Market Offer or Victorian Default Offer rates - or higher. There’s a good chance that if you’re reading this right now, you’re one of them. And if you’re not, you’ve almost certainly got a relative who is.
Don’t forget to claim concessions! A recent study from The Energy Charter found that 60% of households don’t claim the rebates and discounts they’re entitled to.
Some industry commentators have painted a gloomy picture of energy bills, claiming that we’re in for a world of pain over the next decade. I don’t necessarily agree with that view, even if the next few years may be challenging.
But right now there’s never been a better time to save. The power is most definitely in your hands.
