Opinion Piece: Choosing energy plans
by Acting AER Chair Justin Oliver
As more Australians install rooftop solar and batteries, electric vehicles become more common and ageing power stations are replaced, the way electricity is bought, sold and priced is evolving too.
Not since Australians first began connecting their homes to electricity more than a century ago has our energy system changed so profoundly. House to house, neighbour to neighbour, everyone is using electricity differently today than they did even a decade ago.
And that means when it comes to your electricity bill, what's right for your household may be completely different to what's right for your neighbour.
A retired couple who spend most of the day at home will have different electricity needs to a family where everyone is out at work or school. Some households have rooftop solar, batteries or an electric vehicle, while others don't.
Millions of households now generate electricity on their rooftops instead of simply consuming it. The cumulative effect is that we have an abundance of electricity being produced in the middle of the day, which is great for easing demand on the grid, but how do we enable people to take advantage of this, even when they don’t have solar panels of their own?
The new Solar Sharer Offer, introduced under the protection of the Default Market Offer, gives households the ability to opt in to three hours of free electricity in the middle of the day, when rooftop solar generation is abundant and electricity is generally cheapest to supply.
But it’s all about usage, which brings me back to my point about every household being different.
You don't need rooftop solar, a battery or an electric vehicle to benefit from the Solar Sharer Offer. Simply running appliances like the dishwasher, washing machine or dryer during the free period, instead of at 7pm during the evening peak, could make a meaningful difference.
In New South Wales, a household that shifts around 20 per cent of its electricity use into the free period could save around $250 to $330 a year compared with the equivalent Time of Use Default Market Offer – that’s around 2 kWHh of electricity per day, roughly the energy used by one washing machine cycle and one dishwasher cycle. If you have a battery or EV, you could save even more by shifting use into the free period.
For the Solar Sharer Offer, the usage rates outside of the free period are slightly higher. This was done to allow retailers to cover the costs of supplying energy during the free period. However, the protection of the Default Market Offer means those rates are capped, meaning retailers can’t charge any more than the regulated price. A customer on the Solar Sharer Offer who can shift their usage into the free period will still be better off.
Shifting more demand to the middle of the day will lower the cost of the electricity system for all consumers, as we don’t need to build as much generation or poles and wires to meet the evening peak.
But this offer may not be for everyone.
As technology changes, we're seeing more plans designed around different household needs and different patterns of electricity use.
That means comparing plans is not only about finding the cheapest rate. It’s also about finding the plan that matches the way your household lives.
Think about when you use electricity, not just how much. Compare plans at least once a year, because what suited your household a year ago may not be the best option today.
Tools such as the Australian Energy Regulator's Energy Made Easy website can help you compare offers based on your actual use. Your retailer is also required to tell you at least once every 100 days whether they can offer you a better deal.
As the system continues to change, there won't be a single electricity plan that's best for everyone. But it is worth taking the time to find the plan that's right for you.
