How to fight back against rising energy costs

See what's happening on the energy front and how you could save on your bills.

As everyone who pays power bills knows, electricity and gas prices are soaring. In July, electricity prices for most people in NSW rose between 16% and 20%. Gas prices in NSW rose by mid-to-high single digits. Victorians had their annual price hike on 1 January this year, when the big retailers increased their prices by up to 10%.

The increase in NSW will add about $300 a year for average users and about $450 a year to the electricity bill for higher-consumption households. Energy market observers are expecting further price rises.

Gary and Beancaa Stanley are among the estimated 17% of households that have solar. They run their own wallpaper supply and installation business and live in Sans Souci in Sydney's south.

The couple installed an Evergen solar system last year. It has CSIRO-developed technology that learns use patterns to predict needs and factors in weather forecasts.

It has a battery that stores excess solar energy produced during the day and it can be charged from the grid at night when electricity is cheaper. The pair are heavy energy users. Gary, 61, estimates they are saving more than $3,000 from their annual electricity bill.

"I'm really happy with the difference in the electricity bill," Gary says. "It's extremely easy to use, in fact, you don't even know you are using it, as it's automatic."

He estimates that it should take five years for savings on their electricity bills to have paid for the set-up costs of about $15,000. That's a conservative estimate as it assumes power prices remain unchanged. As energy prices rise, the pay-back time will become even shorter.

Gary and Beancaa have gone for an upper-end solar system, but there are systems without batteries that have set-up costs of about $5,000.

Solar power

Adrian Merrick, the founder of Energy Locals, an electricity retailer servicing NSW and Queensland, says those thinking of going solar and installing storage batteries should do their numbers.

With these solar systems, the batteries are charged from solar as well as from the grid overnight.

"Some retailers seem to have put up off-peak rates by much more than the standard rates", Merrick says.

"I think retailers are waking up to that; they are changing their pricing tactics to reflect the fact that there is a lot of solar generation during the day.

"Batteries are an expense that a lot of people cannot afford but if you have solar and no battery, you can still use your hot water as a form of storage.

"Solar could charge your hot water system so that when you come home at night the hot water is available, saving money by not using expensive grid power when the sun has gone down.

"The number one thing solar customers need to do is to maximise the amount of solar that is used inside the home before they need to access the grid."

Cut energy use

Mark Giuliano and his wife Andrea, from Thornbury in Melbourne, considered solar but decided against it.

They switched electricity provider about six months ago to lower their energy costs and have imposed economies to further cut the costs, such as insisting the children switch off lights.

"Invariably, they will walk through the house and every light in the house will be on with a lot of the rooms empty," says Mark, a 50-year-old accountant.

The couple and their four children, aged six to 15, put on extra clothes in winter so as not to have the heating on as high.

These types of economies are being made by more households as energy prices rise.

Two out of five people say they intend to reduce their energy use this winter, according to a survey of 1,000 people commissioned by comparison website Compare the Market.

From among the respondents, those younger than 45 say they are keenest to reduce energy use.

Abigail Koch, a spokeswoman for Compare the Market, says that's not surprising as they are those with growing families, with bigger houses and more household appliances.

Discounts

It is not just about using less energy, but that retailers offer discounts to their standard rates and sometimes they are very attractive, Koch says.

"However, you have to bear in mind the discount usually applies only to usage charges and not to the service charges, the costs of getting energy to your house," she says.

And, "the savings may not be as good as they seem" because the service charge is typically a big part of the bill.

It's also important to be aware that missing a payment by even one day could mean you lose any discount that you have and go back onto the standard rate.

Koch estimates about 80% of customers are on contracts, with 12 months the most common term.

If you do break the contract to go with another retailer there could be a break free, so you will have to weigh up whether it is worth it, she says.

Top tips to save on energy bills

  • Use the sun as a natural heater. Open curtains on your north-facing windows during the day to allow sunlight to heat your home. Close them at night to lock in the warm air.
  • Watch your hot water use. Many people set the temperature of their water very high, when it can be set at about 50 degrees where it's comfortably warm.
  • Use the shortest – or economy – cycles, and only wash full loads in your dishwasher and washing machine. Turn down the temperature of your hot water and use your washing machine on a cold-water cycle.
  • Plan your washing around the weather. Put your washing on the line outside where possible in winter.
  • Get smarter with your lighting. Ensure every light bulb in your home is an energy-saving model. Consider using lamps – they use less energy than ceiling lights.
  • Switch off appliances at the wall. Appliances on standby are responsible for up to 10% of your power bill. A power board can help make it easy for you to switch off all appliances using the same switch.
  • Learn about penalties upfront. Penalties for missed payments vary, but avoiding payments altogether can lead to late-payment penalties, disconnections and reconnection fees. If you're struggling to pay on time, it's best to inform your energy retailer.
  • Monthly billing. This can be done upon request from some suppliers and will help you better monitor your month-on-month energy use and will prevent you facing a costly lump-sum quarterly bill.
  • Keep an eye out for discounts. This is a good way to keep costs low, but be aware some discounts only apply in particular circumstances, such as paying bills on time. Steer clear if you're not confident you can consistently meet the discount's requirements, because if you miss once then you'll end up paying the top rate for your energy use.
  • Review your energy provider. Most households can save by auditing bills and switching suppliers.
     

This article was originally published by the Sydney Morning Herald on 2 July 2017. It represents the views of the author only and does not necessarily reflect the views of AMP.

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© AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.