Summary: I have previously written a detailed post on how to minimise your electricity costs. It contains various tips and insights that apply to gas and water too. This post is much briefer and primarily just focuses on the steps for switching to the lowest cost gas provider that doesn't rip you off.
Our Situation: Until 2016 we were with Momentum Energy for gas as we use them for electricity, they don't ripoff consumers, and their gas offer was competitive with the cheapest plans available. As of Jan 2017, Momentum's gas rates went up considerably and we switched to Red Energy's much cheaper plan identified using the SwitchOn Victorian government website. However, Red Energy only maintained the sign-up rates for 52 days before increasing them beyond Momentum's new rates.
The Energy and Water Ombudsman Victoria (EWOV) confirms there is no minimum period retailers must maintain sign-up rates (unless a fixed term is stated), no limit to the percentage they can increase them, and that it is legal to provide only 1 day's notice of a price change - thus you can be stuck paying higher rates for 2-3 months before another switch takes effect. Nor are retailers required to align the timeframe of major price increases (e.g. January or June) so that consumers can compare them properly. Indeed, it appears they can change rates multiple times a year. I complained to EWOV about these practices but the Victorian government has neglected to restrict them, so they are likely to remain legal for years to come.
Given the above, it's important to identify the retailer most likely to be cheapest over the medium term (at least a few years). And, once you settle on such a retailer, be judicious about switching away because of a customer-aquisition offer that isn't actually fixed for at least a year.
Related Posts:
> Start using the cheapest electricity provider and plan
Details:
1. Use the most useful government comparison website to compare offers each January and switch or ask your retailer to provide a more competitive offer
In Australia, January is the month in which electricity and gas prices are increased. These increases can be significant, especially if you signed up on the cheapest offer previously available. The current business models rely on consumers not checking the best offers yearly to switch or force a better offer.
In the electricity market, Momentum Energy provides 3 year contracts that protect from retail increases (though not pass-through increases). And it offers renewed 3 year contracts at competitive rates. As a low-cost hydro generator it can also offer reliably competitive prices.
In the gas market, it is harder to find a reliably-competitive retailer, so checking the current offers each January is essential.
To use the comparison sites you'll need a recent bill that is roughly reflective of your typical use. The best plan for your circumstances typically varies according to whether you have high, medium or low usage (higher usage costs progressively outweigh daily supply cost differences).
The government websites to use are:
> Energy Made Easy (single Australia-wide gateway)
> SwitchOn (Victorian government website)
2. Gas offers compared using SwitchOn in January 2017
The main inputs you need to get correct are your average daily usage over a recent bill period. If you know your usage will change going forward (higher or lower) you should adjust this accordingly. You may also wish to trial the comparison results if you adjust your usage 30% either side. (If the rankings don't change that's great. If they do, investigate the difference further).
SwitchOn will then show you the best current offers sorted by Discounted Price (includes pay on time and direct debit discounts). You can switch to sort by Price and ignore discounts but there should be no reason why you shouldn't be taking advantage of these considerable discounts. Just ensure that if using direct debit you set it up with a Visa/Mastercard debit card. If you get overbilled you can simply get a chargeback. And if in dispute with a retailer you can cancel the direct debit directly via your bank (you can't with a credit card).
Generally, you shouldn't need to remove offers using the filters. For example, exit fees are often either zero or capped at around $20 so multi-year contracts shouldn't matter. Regardless, even if renting for 12 months only, you can still sign up for a multi-year contract and the exit fee will also usually be waived if you are leaving the property.
However, there is one major reason why you may need to eliminate offers and that's if retailer only offers gas with electricity and you don't want to switch your electricity provider. In my case, I wish to stay with Momentum Energy for electricity as my plan is extremely cheap and so I eliminated all providers that only offer gas plans with electricity (e.g. Simply Energy, Dodo, Alinta).
3. Checking the details of the best offers
Click the "view offer" links to review the details of the cheapest offers to see why they are the cheapest. Often one major factor is in conditional discounts for paying on time or by direct debit. So you'd need to ensure you will be taking advantage of this each billing period. Also check the fees section on the "view offer" popup for any unusually high ones that may apply.
After eliminating offers from providers that required signing up for electricity plans too, Red Energy had the cheapest plan: the "Gas Energy Saver." Note that providers often have multiple plans available at any time, they continually change, and some may not be published on their own websites or advertised. The plan names could also change but the current market rates may be the same (e.g. Red Energy currently calls its market rate plan "Living Energy Saver" on its website.
Always check the Price and Product Information Sheet for the full details. All providers are required to publish these documents on their websites:
- After the 10% pay on time discount, the Daily Supply charge (inc GST) is 67.32cents/day compared to 71.92cents/day
- After the 10% pay on time discount, the usage charge (inc GST) is 1.82c/Mj (first 50Mj/day) and 1.34c/Mj (remainder) compared to Momentum's 2.50c/Mj (first 28Mj/day) and 2.02c/Mj (next 22Mj/day) and 1.68c/Mj (remainder).
Since we put in a reverse cycle air conditioner, we use gas primarily for hot water and cooking. Our annual usage in 2016 was about 13,540 Megajoules (37 Mj/day). Prior to using our reverse cycle air conditioner for heating our gas usage in the middle of winter was 147 Mj/day. It is not unusual for households relying on gas heating in colder parts of Australia to average 175-250 Mj/day in the middle of winter. (Sustainability Victoria estimates average monthly gas use in the colder months at 232 Mj/day.
Thus, compared to most Victorians with gas heating we are a very low gas user. The impact of switching from our current provider to the cheapest is around $100 a year. If we were an average gas user the impact would be around $300 a year. And if we were a high gas user the impact would be at least $500 a year.
4. Compare prices and switch before price rises kick in rather than after
Market offers can change massively (up to 20%) without notice. They often change several times a year as future wholesale prices vary and as retailers compete for customers.
If a rise in market prices is predicted and a current market offer seems cheap then it's important to switch quickly before the cheapest retailer's prices are adjusted up.
For example, Red Energy's "Living Energy Saver" plan had by far the cheapest gas rates on 20 Jan 2017 but was adjusted up by 15 Mar 2017 as were the other cheapest plans.
The gas prices went from 1.82c/Mj and 67c/day to 2.16c/Mj and 70c/day:
When you switch retailer, your prices are locked for a specified period (in my case till June 2017) and then can be varied again. However, most retailers try not to bump them up too much in each year, so it could take a few years for your prices to catch up to market rates.
Further Info:
Sustainability Victoria
> Reports
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