Watch out for energy retailers offering large discounts

A friend approached me the other day promoting electricity from their network marketing group. They offered 3% discount plus another 12% for paying on time. A total of 15%. Sounds pretty good. I’d just noticed an offer for 14% discount from an energy retailer. Even my current energy retailer when I called is now prepared to offer 12% off electricity and 10% off gas, but only if I sign up on a long term contract. All seemingly great discounts.

The bottom line however is you can offer a great discount if your energy charges and service to property charge are higher to start with. What you need to do is to compare what you are actually paying against each offer and keep in mind many of the offers will be better than you are currently paying. Most people by habit don’t negotiate better rates with their current provider so almost any offer will be better than what they are currently paying.

The big charge often missed for many is the daily charge to the property. This can easily be $200-$400 a year and can be reduced by up to a third by shopping around. So make sure you compare your electricity usage plus the charge to your property.

For the daily charge to the property just check your current bill and multiply by 365 for the days in a year. Make sure you include GST. Then for your usage you need to check out if you are paying one rate or two. I use the Energy Cost Calculator to quickly determine the cost over a year. My usage this latest bill was around 7.5kWh per day. So in the calculator I’d enter 7,500 for the watts, enter the rate in cents including GST and 1 for the number of hours. The 7,500 is because 7.5kW the kW is kilowatt and thus we need to multiple be 1,000 to get the number of watts. The one is because it is 7.5kWh per day. We could devide 7500 by 24 to get the  figure for one hour and then enter that number and 24 hours for the time, but it is easier to just assume all the energy was used in one hour for the day. This simplifies the calculation. The Energy Cost Calculator will then show you your daily cost and a yearly figure.

If the energy retailer is offering a discount then discount their rate and use that rate in the Energy Cost Calculator. Also note that some retailers offer the discount only on usage and not on the service fee to the property.

Repeat this process for each energy retailer and then compare the total amounts you’d pay against your actual bill.

I did this same exercise recently and will soon change from Red Energy to a different provider. The saving will be around $175 a year. Our usage is quite low compared to many so for others the saving would be much greater. I haven’t changed yet, but when I compared the offer I found to the offer from my friend’s network marketing group, if I used his group I’d be about $80 worse off. (He does know about the retailer I found.) Be careful of those selling energy services and also friends promoting network marketing schemes. Energy retailers just want your business. Sadly friends in network marketing groups seem to just want their commission (or to sign you up) and if they do know of a better deal, will often neglect to mention it. Make sure you do the calculation yourself.

Kelvin Eldridge
www.OnlineConnections.com.au
Call 0415 910 703 if you require computer support.
Providing support in Templestowe, Doncaster, Eltham and the surrounding area.