Understanding the Energy Debate

What can we do to become more empowered consumers, actively engaging with our energy usage and the energy debate?

What’s the Problem?

The energy debate is full of jargons and acronyms, such as the Renewable Energy Target (RET) and the National Energy Market (NEM). What does “clean coal” actually mean and why is the Finkel Review such a big deal? Are our electricity prices increasing because of distribution costs like poles and wires, the transition to greener energy sources, or is it just due to profiteering by energy retailers?

There are also many different goals for Australia’s energy policy, which are often in conflict with one another:

• Reducing emissions
• Keeping up with global commitments
• Increasing reliability of energy
• Keeping energy affordable for everyone.

With such an information overload, it is no wonder that many of us feel that we have no control over our electricity bills and disengaged with the solutions to the problem. To make matters worse, unlike rent or mortgage payments which are regular fortnightly or monthly costs, electricity bills come to us quarterly and many households experience ‘bill shock’, often wondering why bills are higher than expected. Recent research also shows that despite the plethora of choice, many households are not shopping around for the best offers and are therefore likely to be paying 15-20 per cent more than necessary for their electricity and gas.

Low-income and disadvantaged households have the highest barriers to engagement. Understanding and being engaged with the energy debate often requires time and energy, resources that many disadvantaged households might not have as they are already facing multiple stressors. Moreover, renters are often not in a position to take actions such as energy efficiency upgrades or the installation of solar because they do have the authority nor means to do so.

The good news is that there has never been a better time to take action and get in control of your energy usage and bill. As energy companies face government pressure to point customers to available discounts, they are being forced to step up and offer you a better deal.

What are your ideas on how we can be more empowered to engage with our energy usage?

Key Facts

• Understanding the building blocks that comprise our electricity bills can help us better understand where costs are coming from and where future cost reductions can be made. A typical bill will come from:
  • Network costs (45 per cent)
  • Wholesale costs/production (23 per cent)
  • Retailer controlled costs (16 per cent)
  • GST (10 per cent)
  • RET, other state-based tariffs (8 per cent)

• The area where you can save the most money is in retailer controlled costs. You can do this by looking for asking your retailer for more discounts or switching providers. There are some estimates that customers can save as much as $1,400 a year by switching energy providers.
• The difference between the best and the worst market offers is very large. In Victoria, for example, the difference can be up to $830 per annum for electricity and $480 for gas, which could be a significant savings and benefit to many households.
• Around 55 per cent of all energy consumers had not switched electricity retailer or plan in the last five years.
• Unsure of how to ask for more discounts? Watch journalists approach their energy providers and get as much as 16 per cent additional discounts, saving $320 a year on their power bills.
• High discounts do not always lead to the lowest possible electricity bill. Because of misleading headline discounts, a 37 per cent advertised price cut with one retailer may be barely different to a 10 per cent offer from another.
• If you are facing difficulties in payment, make sure you contact your retailer to find out how they can help you. Your retailer may assist you by putting you on a financial hardship program.
• If you are on a hardship program and are willing to pay and engage with your retailer (by keeping them informed if you are having problems) they are not allowed to disconnect you if you don’t pay your bills.
• Visit https://www.energymadeeasy.gov.au/ to compare the market and see what are the best energy deals for you.
• Stumped by the jargon of the energy debate? Here is a glossary of the energy debate explaining the terms that you often see in the news.