Winter is showing no sign of abating and many households are beginning to worry about the cost of keeping warm. Heating costs between June and August represent about one-third of the typical electricity bill of $489 in NSW and Victoria, according to estimates by comparison site Mozo. Here’s how to stay warm ‘n’ toasty without depleting your savings account.
The cost of energy bills is one of the main reasons many Australians struggle to make ends meet.
Temperatures have gradually been getting colder over the past few weeks, and households are starting to turn their heaters on; especially in Melbourne. Households have to be careful or risk getting a shock when the bill comes in.
The Rowe family in Coburg, Melbourne has invested thousands in home improvements and is now reaping the benefits of reduced heating costs.
Josh Rowe, 42, says putting in solar panels a year ago and switching energy providers at the same time is saving the family hundreds of dollars a year in energy bills.
Josh Rowe and two of his children, Archie and Madeline, sit over the central heating vents to stay warm in Coburg, Melbourne.
Rowe and his wife Naomi, 38, who have three young children, were spending almost $500 during the autumn quarter but so far this autumn are on track for a bill of about $400.
The pair spent about $3000 installing solar panels and they have a reverse-cycle air conditioner for the hot months. When they renovated their home about 10 years ago, they installed ducted heating.
“When it gets chilly the kids hog the ducted heating vents in the morning and everyone loves them,” Josh says. He says the ducted heating is very efficient because the temperature can be set in each room.
“And when we did the renovation we put in high-grade insulation and put the windows in the right places,” he adds. Experts say the very first thing to do is to keep a lid on the costs of heating is to ensure the home is properly insulated.
Chris Barnes, a team leader at consumer group Choice, says ceilings should be insulated, doors and window draughts stopped-up, windows covered at night and doors closed between heated and unheated areas. While is commonly believed that gas heating systems are cheaper than electricity, the notion has been questioned. Barnes says gas prices are set to rise and it is no longer a given that gas heating is going to be cheaper than electricity.
Cameron Chisholm, the energy program associate at the Grattan Institute, writing for The Conversation last year, said many people like gas heating because it heats quickly, it is easy to control the temperature and you do not need to stand directly in front of it to feel the heat.
However, gas prices will rise because of expansion of the Australian gas export industry. The Grattan Institute’s October 2014 report, Gas at the crossroads, shows reverse-cycle air conditioners can have less than half the running costs of ducted gas heating.
Choice’s Chris Barnes agrees that electricity is generally cheaper than gas for heating. “For heating a large space or a large house, the reverse-cycle airconditioner is starting to look like a no-brainer,” he says.
Chisholm goes further to argue that even before the expected increases in gas prices kick in, households could make considerable savings by replacing gas appliances with energy-efficient electric ones. As always, it is worthwhile shopping around for energy providers.
That is not just with a view to switching providers, but just as a check on whether or not you are getting a good deal, says Laura Crowden, a spokesperson for iSelect, a financial products comparison website.
Discounts are now fairly common with energy providers, but an iSelect-commissioned Galaxy survey of 1200 people shows 31 per cent of households are still on standard retail energy plans without discounts.
Crowden says the biggest discounts, of about 30 per cent, are for paying on time. Some providers offer a further discount, generally 1 or 2 per cent, for paying bills online by direct debit. As well as straight-up discounts for paying on time, there are always special offers.
“Increased competition means some retailers are offering generous introductory offers or rebates to entice new customers such as credit awards towards your accounts,” Crowden says.
Most retailers offer flexible payment options, where the pay can be paid weekly, fortnightly or monthly. Crowden says some provide bill smoothing so there is no bill shock, where the energy retailer divides annual usage into even monthly instalments.
Sometimes the cheapest plan may not be the best value option over the longer term, Crowden says. “For example, many people get enticed by generous pay-on-time discounts but pay their bills late and end up paying a lot more,” she says.
Energy concessions, rebates and eligibility conditions vary from state to state. Some states offer rebates on energy bills to lower-income earning families.
For example, families in NSW who have received the Family Tax Benefit A or B during the previous financial receive the Family Energy Rebate of $150. There is no equivalent rebate for families in Victoria. There are discounts on energy bills throughout Australia for holders of various concession cards, like the pensioner concession card and health care card.
NSW: Mozo says some of the best deals include CovaU’s Freedom Save, which has a 16 per cent pay-on-time discount. That works out at $364 a quarter compared with the typical NSW electricity bill of $462 a quarter. In NSW, Dodo Power and Gas’s Market Offer has a $100 credit on the first bill and a 20 per cent pay-on-time discount, or a cost of $370 on typical electricity use.
PowerShop’s Online Saver has a 4 per cent discount plus a 12 per cent discount when the bill is paid through the provider’s online shop, or a cost of $369.
Victoria: More competition means lower prices. Globird Energy’s GloSave has a 32 per cent pay-on-time discount and a 1 per cent direct debit discount, or a cost of $255 a quarter compared with the typical spend in Victoria of $392 a quarter.
Dodo Power and Gas’s Market Offer has a $100 credit on the first bill and 30 per cent pay-on-time discount, or a cost of $271.
Powershop’s Online Saver has a 18 per cent discount and a 16 per cent discount when bills are paid through the provider’s online shop, or a cost of $274.
With Powershop, consumers can track electricity use frequently, even daily, and buy power in advance with a smartphone.