Energy Report 2020: How prices have changed and where to find Australia’s cheapest electricity plans

Energy report quick facts:

• Electricity price falls in ACT, NSW, QLD, SA
• Moderate price increases in VIC
• Potential savings of between $200 - $300 a year, depending on distribution zone
• Green plans cheaper than the average - SA could save as much as $257

Summary: Aussies need to switch on to save

Energy bills are one of the largest household expenses in a normal year, but with COVID-19 keeping more of us indoors than ever before, energy usage and the costs involved have become even more significant. For instance, Australians working from home are forking out an extra $88 a month for electricity. 

But there’s some positive news. According to the latest Mozo research conducted as part of the recent 2020 Mozo Expert Choice Energy Awards, Aussie households are largely winning big when it comes to energy prices. 

Average annual electricity prices have actually fallen over the past year in most parts of the country, with reductions between $70 to $150 in New South Wales, South-East Queensland and South Australia. It’s a different story for Victoria though where prices have increased. 

Interestingly, green energy plans are becoming more and more accessible, with households in most states now able to sign up to a green plan that costs considerably less than the price of the average electricity plan. 

But the major takeaway remains the same: if you want to save on your electricity bill you’re going to have to shop around, because the difference between the average and cheapest prices in every state and territory remains substantial.

The state of Australian electricity prices

Explainer: In NSW and VIC there is no single electricity distributor, meaning each distributor covers a specific area. For QLD, our awards (and therefore this report) only include the South-East Queensland area covered by distributor, Energex. Distributors are different from retailers (the companies which sell electricity to customers) but they are important for the geographic distinctions we make below. 

For years the familiar story for Australian households was largely one of increasing energy costs. However, since the introduction of various regulations and reforms, including the Default Market Offer (DMO) in 2019, that bill pain has lessened. 

This is supported by the latest Mozo figures which show that residential electricity prices have fallen over the past year in most states and territories, with the exception being Victoria where prices have increased. 

So just how far have average electricity prices moved between August 2019 and August 2020? The following graph shows price changes over the past year in five capital cities, but we’ll expand on this further in our state-by-state breakdown below.

Australian Capital Territory

• Canberra: $1,267 average annual bill

Electricity prices in the ACT are regulated, which means households in Canberra and the rest of the territory tend to have lower bills than residents in other parts of the country. It’s perhaps unsurprising then that the average annual electricity bill in the ACT of $1,267 was the cheapest in our analysis. Year-on-year average prices were relatively stable though, with a $9 reduction on the average annual bill since August 2019.

New South Wales

• Sydney: $1,568 average annual bill
• Wollongong: $1,553 average annual bill
• Port Macquarie: $1,869 average annual bill

There are three different distributors in NSW, each operating in a different region: Ausgrid covers Sydney, Endeavour Energy covers the Blue Mountains, Southern Highlands, Illawarra, and parts of the South Coast while Essential Energy covers the rest of the state. So the cities used as examples above correspond to one of these network areas. 

The big picture for households in New South Wales though is that prices have dropped across the board. In Port Macquarie and Wollongong for example, average annual prices have dropped by around $70, while for Sydney the average price has gone down by $82 since 2019.

South-East Queensland

• Brisbane: $1,178 average annual bill
  

According to our analysis, not only are households in South-East Queensland paying some of the lowest electricity bills in the country outside of the ACT, prices in this region have also experienced some of the largest price drops in the past year. For example, since August 2019 the average annual electricity bill in Brisbane has dropped by $104 to $1,178.

South Australia

• Adelaide: $2,030 average annual bill
  

The news for South Australian residents is both good and bad. While the state has the most expensive electricity bills out of all the states and territories we analysed, South Australia also experienced the largest price falls over the past year. For example, in Adelaide, the average annual electricity bill fell by $154 to $2,030 in the period from August 2019-20.

Victoria

• Central and Western Victoria: $1,739 average annual bill
• Eastern Victoria: $1,935 average annual bill
• South-East Melbourne: $1,745 average annual bill
• Inner Melbourne: $1,631 average annual bill
• North-West Melbourne: $1,727 average annual bill

Victoria has five different electricity distributors. Powercor operates in Central and Western Victoria, AusNet in Eastern Victoria, United Energy in South-East Melbourne, Citipower in Inner Melbourne and Jemena in North-West Melbourne. 

Unfortunately for households across the state, our analysis revealed that electricity prices rose moderately throughout Victoria over the period from August 2019-20. Eastern Victoria still remains the region with the most expensive average electricity price in the state at $1,935 per year (up $86), while South-East Melbourne recorded the largest price increase of $96 over the period.

Don’t get stuck with the average

While research has shown that energy bills can be a household’s biggest financial stressor, it’s also one of the biggest places to save. 

According to Mozo analysis, there were massive gaps between the average and cheapest energy plans across the country. The data revealed that potential savings for making the switch from the average to cheapest energy plan was around $200 - $300 a year. However, this all depends on a household’s distribution zone.

For instance, NSW households within the Essential distribution zone have the opportunity to save $311 a year just by switching to the cheapest offer in the market, while VIC residents apart of the Jemena distribution zone could see annual savings of $323. 

However Mozo Director, Kirsty Lamont reminded Aussies their postcode isn’t the only way to guarantee yourself a better deal. 

“Don’t feel discouraged if your distribution zone isn’t necessarily a ‘hot spot’ for savings, there’s still little point in settling for a dud deal,” she said. “Our research has shown that Aussies can still snag a more competitive offer, just by shopping around. 

“Or if you prefer to stick with your current retailer, give them a call and ask for a better deal. You could be surprised with just how much they’re willing to shave off if you mention you’re thinking about switching.”

How affordable are green electricity plans?

Increasingly, Australians are also on the lookout or retailers that care about the environment and avoid investing in fossil fuels. With green electricity plans, you can be reassured that your provider is committed to being 100% carbon neutral, and generates (or purchases) 100% renewable energy. 

But if you’re worried that sustainability will cost you more, Mozo data proves that doesn’t have to be the case. Almost across the board, the cheapest green plans are better value than the average.

However the size of savings can vary quite a lot, depending on your distribution zone. South Australians are the luckiest of the bunch, with a switch from the average to the cheapest green plan (Powershop Shopper Market Offer) reaping them the biggest potential savings of $257 per year. NSW follows closely with possible annual savings of $206 for regional residents, $166 for Sydneysiders, and $167 if you live on the South Coast or in the Blue Mountains. 

As for Queenslanders and Canberra residents, they could save as much as $105 and $106 respectively, just by making the switch. 

Meanwhile Victoria recorded the slightest gains, with Melbourne residents saving potentially $32-$94 per year on the cheapest green plan. There’s one exception to the rule though: unfortunately for Central and Western Victorians, the best green electricity prices are still $9 higher than the average. 

“In most cases, the data reveals that you can help save the planet and save money at the same time,” Mozo’s expert Judge, Peter Marshall said. “For our 2020 Mozo Experts Choice Energy Awards, Powershop came out on top as the green retailer with the best residential prices in four states (NSW, VIC, QLD, SA), while Energy Locals had the cheapest green plan for the ACT.”

Conclusion: Shopping around a must

Given that electricity is a staple cost for all households, you could be forgiven for believing everyone pays the same or similar prices. But the reality is far from that: sticking to the Default Market Offer, otherwise known as the ‘reference price’, could see you coughing up hundreds of dollars extra every year.

That’s why it’s important to shop around. Most of the time you can compare plans by looking at how much less than the reference price you will pay.

“Do the maths and pay attention to what you’ll actually be charged for your plan. While it’s easy to be tempted by retailers offering bigger discounts, that doesn’t always mean cheaper deals. For instance, a plan with no discount could still give you a bigger cost saving than a plan with a 30% discount,” Lamont said. 

In fact, when assessing electricity plans in the 2020 Mozo Experts Choice Energy Awards, Mozo’s research team found that standout performers like ReAmped Energy (who snagged the Residential Electricity Retailer of the Year title) don’t actually rely on discounts but keep things simple by providing the lowest prices upfront.

Head over to the 2020 Mozo Experts Choice Energy Awards page for a full list of winners. Or if you’re after more options, Mozo’s energy comparison tool can help find the best deal for you.

This report was a collaboration between Katherine O'Chee, Tom Watson and Ceyda Erem.