Plug into a smoother option amid the heat
With the hot weather approaching, resulting power bill rises can now be avoided, writes Tim McIntyre
RISING energy costs have put huge pressure on the household budget and this will intensify as the peak summer usage period approaches.
But while we may need to use more energy to stay cool in the hotter months, there need not be a spike in payments, thanks to “bill smoothing”.
Bill smoothing works by spreading estimated power costs out through the year, using usage from previous years as a guide, so that the customer pays the same each month, according to Canstar Blue spokesman Simon Downes.
“Energy retailers typically suggest bill smoothing to customers who fall behind with their power bills,” Mr Downes said. “You might be able to access bill smoothing from the start of your contract, or at your request later on.”
There are potential downsides though, for those looking to set up a plan.
“While it helps spread the annual cost of energy over the year, it could mean you’re left paying more for power than you otherwise would at certain times of year,” Mr Downes said. “However, the flip side is you’ll have lower bills at (other) times.
“Also keep in mind that if your energy usage is greater than anticipated, you may be left with a large ‘settlement’ bill at the end of the year to account for the additional costs incurred. If your annual usage was less than anticipated, you should be credited the difference on your next bill.”
Retailers will often update customers to let them know whether their usage is consistent with predictions and will review forecasts for future years if usage habits change.
“You should still be conscious of the price you’re paying for energy,” Mr Downes said. “Don’t fall into the ‘set and forget’ trap . . . paying a higher price for electricity than you need to. You should still shop around and compare energy offers to make sure you’re getting a good deal.”
Most retailers offer bill smoothing as an option, but there are differences. AGL allows it on all of its energy products, according to Mr Downes, as long as customers have no overdue debt and are not on a hardship plan. Customers can choose to cancel at any time.
Red Energy gives customers the choice of weekly, fortnightly or monthly payment options, as long as payments are made by direct debit. Red Energy offers six-month reviews of accounts.
Origin offers regular bill smoothing but also has the ‘Predictable Plan’, which is different from others because you can use more energy than forecast, but with no settlement bill at the end of the year.
The flip side is that you also do not get a credit if you use less than forecast.
Origin spokesman Stuart Osbourne said if a customer is using less than they predicted, the company can re-quote them.
“They can then exit their current Predictable Plan at no cost and . . . switch to another product if they prefer, with no penalty, at any time,” he said.
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