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Blog Post Tuesday 20 November 2018

Step-by-step Guide to Finding the Right Energy Plan

Step-by-step Guide to Finding the Right Energy Plan

Choosing the right energy plan could ultimately save you money while giving you a service that closely matches your household's needs. With a long list of considerations - including price, contract terms and conditions, tariffs and discounts - getting your head around the vast array of plans can seem like a big challenge in itself. Luckily, here we've broken the process into manageable steps to help make it a little easier for you.

1. Compare the price of supply and usage charges

Price is probably the first thing that comes to mind when choosing an energy plan. When you're looking at the price of a plan, you'll usually see two key components: the supply and usage charges. The supply charge is a locked-in daily rate for the connection and you'll pay this same charge every day regardless of your usage. In contrast, the usage charge varies as you use more power, and it's usually expressed as a rate per kWh.

So, you'll need to compare the price of supply and usage charges. A smaller household could benefit more from a lower supply charge, while the usage rate could be more important if you have a large household.

Of course, basic price categories like supply and usage rates don't tell you the whole story when it comes to costs and potential savings. You need to look at things like variable or fixed rates, single-time or time-of-use tariffs, and discounts. We'll take you through those in more detail below.

2. Assess your level of control

How much control, visibility, and convenience does the plan offer? For example, can you easily check your energy rates and find out your usage levels? This might be important if you're looking to conserve energy. Additionally, does the retailer require you to be locked into a long term contract? Choosing a no-lock-in contract could give you more control and flexibility. Other factors to consider include how you can access your bills and the payment options you have.

3. Read the contract terms and conditions

Check over all the contract terms and conditions carefully. The key terms and conditions to look out for include the following:

  • Length of contract - If it's a lock-in contract, how long is it for? Contracts can range from multi-year plans and 12 month plans to six or three month contracts. Make sure you're happy to be locked in for that time at the fixed or variable rates.
  • Locked-in or no-lock-in contract - A locked-in contract means you'll be stuck with the same retailer for months or years. You might prefer a month-to-month contract for the flexibility and freedom of being able to change if you need to.
  • Standard or market retail - A standard retail contract uses model terms and conditions set by the law, while a market retail contract offers market prices. Standard retail contracts have no exit fees (in NSW) and allow you to switch at any time. However, the rates you pay are set by your state or territory government and so the rates, along with the terms and conditions could be less competitive.
  • Exit fees - Does the plan charge you an exit fee if you choose to end it early? If it's a month-to-month contract, will you need to pay a cancellation fee nevertheless?
  • Other fees - Ask about any additional fees or charges. For example, if you want to switch to a different plan with the same retailer, will you be charged? Other fees could include late-payment fees, set-up fees, charges for paper bills, disconnection and reconnection fees, and payment processing fees.
  • Cooling-off period - Does the plan offer a cooling-off period if you change your mind?
  • Solar customers - Does the retailer or plan offer provisions for solar customers? If you have a solar system, can you get connected to sell excess power back to the grid on the same plan?

Electricity rates: variable or fixed

Both variable and fixed plans have their pros and cons depending on your requirements. Most electricity plans are variable plans, and this means your retailer can change the rate at any time. In contrast, a fixed plan will see your bill calculated according to a specified rate for the term of your contract.

When comparing fixed versus variable, consider the discounts that are applicable. For example, a fixed rate with a lock-in contract could seem much cheaper at a glance, but when you compare it to the variable plus discounts and no-lock-in contract, it could work out to be much more expensive.

So whether a plan is fixed or variable won't tell you all you need to know. Make sure you consider the rate - whether it's fixed or variable - along with other factors like discounts, contract period, exit fees, and any additional charges and costs.

Single rate or time of use tariffs

A plan with single-rate tariffs means there's no peak or off-peak period and you'll be charged the same rate no matter the time of day you use power. Time-of-use tariffs, on the other hand, means you're charged a different rate depending on the time of day. You'll have a smart metre that tracks usage at peak, shoulder, and off-peak times.

Which type of tariff is best for you depends on your usage patterns. If you mostly use power during off-peak periods, time-of-use tariffs could allow you to save more on your power bill. However, if you use most of your energy during peak periods, a single-rate tariff could be the better option.

Discounts and rebates

Discounts and rebates considered with rates give you the best idea of how much you could save on different plans. Look at all discounts and rebates offered under the plan. These could include pay-on-time discounts, discounts on supply or usage rates, bundling, or direct debit.

Environmental consciousness

Choosing a greener retailer or a retailer that cares about the environment could be another consideration. With widespread awareness of climate change, you might value going with a retailer that's environmentally and socially responsible.

So choosing the right energy plan for you involves considering the terms and conditions as they apply in your circumstances, as well as your personal preferences. If you follow this simple guide, you could end up with an electricity plan that not only meets your requirements but helps you save more over the longer term.

We can help find the right energy plan for you

Click Energy is a 100% online energy retailer, and we're committed to making electricity as simple as possible for our customers. We can help you find the right energy plan for you, with pay-on-time discounts and no lock-in contracts. Check out our great value energy plans or get a quick quote now.