Prepay to short circuit electricity bill shock

CASH- strapped households looking to ease energy bill shock are turning to prepaid plans to get ahead of their rising cost of living expenses.

Bulk- buy energy deals are trickling into the market allowing households to pay for chunks of energy in advance and also snare discounts for paying ahead.

Smaller energy retailer Powershop’s bulk pack is already available in NSW, Queensland and Victoria and big energy retailer AGL recently rolled out prepaid deals for Victorian customers.

Analysis by financial comparison website Mozo shows the new AGL offer allows customers to receive bigger discounts the larger the amount they pay in advance.

For instance, customers prepaying $ 50 get a $ 10 credit, while customers prepaying $ 100 get a $ 30 credit.

Mozo spokeswoman Kirsty Lamont said the latest ways to pay could help struggling households minimise the burden of receiving a large quarterly bill while also being rewarded.

“These sorts of deals are likely to be something we see more and more of as energy retailers take a cue from the mobile phone industry and start to offer customers the option of prepaying,’’ she said.

“They can be a really useful tool for households who have struggled with energy bill shock in the past or scramble to find the money each quarter to pay a large energy bill.”

Ms Lamont said prepaid plans allowed energy chewers to make smaller, more frequent upfront payments and get ahead.

Some retailers are also giving customers similar ways to pay in advance by forecasting a customer’s typical energy usage, before doing an actual meter reading each quarter and “smoothing” out the total bill cost during each quarter.

This means the customer may be in credit or arrears depending on how much they have paid and how much energy they have consumed.

Dodo general manager of product, David Marshall, said it offered customers the ability to pay as frequently as weekly.

“It’s great because the payments for Australians are likely to be paid in weekly or fortnightly cycles so it allows that flexibility,’’ he said.

AGL’s chief customer officer Melissa Reynolds said the new prepaid product rewarded customers “with a bonus credit for every eligible prepayment of more than $ 50 until a cap is reached.”

AGL has plans to offer prepaid options to other states where customers have digital meters including Queensland, New South Wales and South Australia.