Can fixed energy plans save Aussies from mounting power bills?
Finding the best value energy plan for your household is not always easy - discounts, usage rates and feed-in tariffs are just some of the things Aussies need to consider. And now, an extra consideration has been thrown into the mix - to fix or not to fix?
In some states, energy prices have risen by as much as 29% in the last two years and recent Mozo analysis has revealed that retailers are increasingly looking to fixed rate energy plans to stop customers jumping ship for a cheaper deal.
“Aussies are - quite rightly - starting to shop around for better value on their energy plan,” said Mozo Director, Kirsty Lamont.
“The energy retailers’ answer is to roll out these new “fixed rate” plans, which allow families some peace of mind by locking in a certain rate.”
Although the only truly “fixed rate” option - meaning the tariffs are fixed for the life of the contract term - is the Secure Saver from EnergyAustralia, other retailers are offering similar assurances of fixed pricing.
Energy Locals currently guarantees no tariff increases before 1 July 2018 (available in NSW and Queensland), while Red Energy guarantees no tariff increases before 1 May 2018 for Victorian electricity customers.
There’s also the Origin Energy Predictable Plan, which guarantees your bill cost for the year, no matter how much electricity you use.
But are fixed rate energy plans really all they’re cracked up to be?
“The real benefit of a fixed rate offer is that if and when energy prices rise again, your bills will be safe. This certainty makes it much easier to budget, because you know what you’ll need to pay for the foreseeable future,” said Lamont.
There’s also the fact that at the moment, fixed rate energy plans can work out slightly cheaper than some of their more changeable counterparts. Mozo’s data crunchers found that in Victoria and NSW, the EnergyAustralia Secure Saver would be cheaper than the lowest offer in Mozo’s database by $68 and $26 respectively over the next 2 years, assuming 10% annual price increases.
How a fixed energy plan stacks up
“The downside is that if you're prioritising choosing a plan with a fixed tariff, you run the risk of potentially paying more for your energy than you would have if you'd shopped around and found the cheapest available plan,” added Lamont.
For example, in Queensland, the EnergyAustralia Secure Saver actually came out $29 more expensive than the cheapest energy plan available over a 2 year period. Energy prices would have to increase by 10.84% annually before the Secure Saver became better value for Queenslanders.
“For some people, having fixed energy costs and being able to budget effectively may be the best option, but it’s important not to panic about rising power bills and rush into a deal that may not actually offer the best value for money,” said Lamont.
According to Lamont, things like pay-on-time discounts, online discounts and the usage and supply charges on offer are also important to consider. She urged Aussies to do some research into possible plans and what suits your needs and budget best before signing on.
To make that an easier task, head over to our Energy Cost Cruncher to run the numbers and find some of the best energy plans around for your household.