Are You Cashing In On Lower Wholesale Electricity Prices?
A general rule of thumb for paying as little as possible for your electricity is to check and compare what you are spending at least once a year. That’s because the vast majority of discounts last for 12 months and then revert to a more expensive rate unless you act.
Do nothing for two years, and you might get one year of cheap electricity and then another that is far more expensive.
However, checking your electricity cost even annually might not be enough right now because wholesale power prices are plunging and the market re-set on July 1. Even if you moved to a good plan in June, the chances are there are already cheaper deals to be found.
Energy bills have become somewhat of a “moving target” and you will save more if you move with them.
Usually, mortgage interest rates and phone plans have the fastest-moving price changes: they are always moving and if you are not changing as well, you end up marooned on a high price as the tide goes out. However, the energy tide is also finally ebbing now, too.
Last week, Energy Minister Angus Taylor warned providers to pass on declines in wholesale electricity prices, which have tumbled to five-year lows.
Wholesale prices, which make up about one-third of your electricity bill, are down 48 per cent to 68 per cent on what they were a year ago.
However, just like the banks with their mortgage interest rates when they often pass on just a fraction (or none) of Reserve Bank of Australia official rate cuts, pushing through lower wholesale prices to customers is not mandatory. Not yet anyhow.
Even those electricity retailers that do pass on the savings might take a little while to do so, pocketing a little bit of extra profit at a time when their businesses are being hammered (to be fair) by thousands of unpaid bills in the wake of the COVID-19 economic crisis.
Some providers also buy long-term wholesale electricity hedging contracts, so it is not always as simple as immediately passing on savings. Still, it is up to us to reward the providers that do and cash in on the savings, especially in tough times when many people are hurting financially.
A year ago, the biggest discounts that could be found in NSW and Victoria were about 15 per cent and 10 per cent, respectively, less than government reference prices.
However, as of July 1, the cheapest rates have grown to a discount of more than 20 per cent and 15 per cent, respectively.
Energy is one of the simplest and quickest bills to switch and save. Start by visiting the Econnex energy comparison website and go from there.
And to put a few common myths to bed: your supply will not be interrupted if you switch, you won’t have to contact your old supplier if you don’t want to; and one retailer’s energy is no better than another’s – they are all selling the same thing.
I have switched suppliers about half a dozen times in the past decade and about two million households do so every year. If we all did, we would have a cheaper, more competitive electricity market.
Here’s How You Do It:
Step 1: Enter your postcode
Step 2: After answering a few questions, you will have the opportunity to compare quotes from 20 providers in your area and could be eligible for significant savings.