How to beat bill shock

RACV RoyalAuto magazine

If the “amount due“ on your latest energy bill came as a shock, shopping around for a better deal could help you take back control.

Summer heat and price rises make January the ideal time to shop around for the best energy deal on the market, according to RACV’s senior product manager energy, Kieran Davies.

“For most people the summer months will mean their biggest electricity bills, so switching now will see immediate savings over the next few months,” he says.

Securing a good deal is particularly pertinent this summer, as households have just been slugged by another energy price hike. Over December and January, major retailers including AGL, Origin and EnergyAustralia have increased their tariffs.

Increases over the past year are expected to cost Victorian households an additional $70 to $200 per year, with inner-Melbourne suburbs feeling the brunt of the largest increase.

Kieran says there are several factors behind what feels like never-ending price increases.

The main factor is an increase to the wholesale price of electricity – this is the price paid to electricity generators rather than the cost of maintaining the network (including infrastructure like poles and wires).

The closure of older power stations, such as Victoria’s Hazelwood brown-coal power station in March 2017, meant the wholesale price increased by around 50 per cent last year.


This price increase is passed on to consumers, with wholesale costs comprising about one-third of an average power bill.

Of course, energy use is also at its peak in summer as many households rely on air conditioning and ceiling fans to beat the heat. This means there may be some double bill shock with an increase in tariffs as well as consumption.

The good news is that wholesale prices are expected to decrease later this year and into 2019 due to new wind and solar generation providing some much-needed respite for consumers.

Kieran says that switching to the best deal in market can limit price changes – and that often the difference between the average electricity deal and the best in market is more than $500 a year.

But he also urges people to look beyond the promise of discounts and deals, which can be misleading over a fixed term.

“Retailers can offer a cheap deal to attract new customers and then slowly that deal becomes less and less competitive,” he says.

“By always switching to the best deal in the market, some households in Victoria could avoid the January price rise altogether.”

RACV’s Energy Compare tool could be what you need to take back control, and save up to $500 a year on electricity. Find the Energy Compare site at racv.com.au/energycompare.

Written by Kathryn Kernohan
January 23, 2018