How to avoid energy bill shock

Fact Checked

Bill shock is when you open your bill to discover that it’s more than what you had intended.

Canstar Blue has produced this guide to help you understand energy bill shock and what steps you can implement to take back control come bill time.

How to avoid energy bill shock

According to the Australian Energy Regulator (AER), wholesale electricity prices rose in all regions between 49-134% compared to last year. The recent increases in costs of living are resulting in bill shock for many Australians. The following tips can help you avoid future bill shock:

Actively compare energy retailers, plans and discounts

Look at your current energy plan and compare actively to see if you can find a better retailer or energy deal. If you haven’t changed your energy bill in the last 12 months, you are likely paying the default market offer (DMO). When researching market offers, always be on the lookout for guaranteed discounts and bill credit schemes for extra savings.

Choose the right tariff for you

Choosing the right tariff will depend on your energy usage habits and lifestyle. For example, if you consume more electricity during a peak period (e.g. night time), a single-rate tariff would be cheaper than a time of use tariff, which charges lower rates during off-peak hours and higher rates during peak hours. Conversely, if you consume more electricity during off-peak periods (e.g. day daytime), a time-of-use tariff would end up cheaper than a single-rate tariff, which charges a flat rate regardless of the time.

If you have multiple high-energy consumption appliances in your home, a controlled load tariff may also help you save money by limiting its operating hours to non-peak times.

Allocate funds for a rainy day

If you pay your energy bills quarterly, allocate funds away every month in preparation so you already have money on hand when the bill drops.

Consider rooftop solar

Embracing rooftop solar means that you won’t pay for grid electricity during the day when any solar energy that’s captured is used to power your home. Excess solar energy can even be stored for night-time use if you have solar battery or exported to the grid in exchange for a bill credit if you sign up for a feed-in tariff (FIT). However, it is important to factor in the upfront costs of installing a solar system and its payback period (e.g. how long it would take for solar energy savings to exceed its installation costs).

Make your home more green

Make your home more energy efficient by making structural changes to its interior and exterior, such as adding adequate insulation in preparation for summer and winter. Taking these preparatory steps will reduce your energy bills, season after season.

Manage your energy usage

Consider your energy usage, including which appliances use the most power and what you can do to reduce this, such as setting the air conditioner at a lower temperature and only running the dishwasher once a day rather than twice. Encourage others to think more carefully about their energy consumption too.

If you have a smart meter, you can accurately monitor your energy usage habits by attaching an aftermarket electricity usage monitor to it or by downloading your retailer’s energy application on your smart device (if any).

Bill smoothing

Talk to your energy provider about bill smoothing. You’ll pay the same amount each billing period, removing the peaks and troughs of seasonal energy bills.

Compare your energy plan

Could the bill be wrong?

You might be thinking that your energy bill is wrong, but in the vast majority of cases, bills are accurate.

It’s worth understanding how your energy bills are calculated, in case something is calculated wrong, or if you have an ‘estimated’ bill.

When you get an energy bill, it will have been produced in one of the following ways:

Quarterly meter reading

Someone visits your property to read your energy meter so your provider can give you an accurate bill.

Monthly accurate bill

If you have a smart meter, your energy provider will receive a monthly review of your energy usage for accurate billing.

Monthly estimated bill

If you don’t have a smart meter but your energy provider has monthly billing, you may receive a monthly estimated bill based on your typical usage or an amount picked by your provider.

You may also have agreed to an amount to pay each billing period with your energy provider as part of a bill-smoothing plan. But in this case, the bill should be calculated at the agreed-upon amount.

Contacting your energy provider

If you’re thinking about contacting your energy company to inquire about your bill shock, it’s a good idea to know which bill type you received.

If you’ve received a quarterly bill after a physical meter reading, there may be a chance that the meter reader got their numbers mixed up. While unlikely, you could check the meter yourself and report the figures to your provider so they can cross-reference them with what they have.

If you’ve received a bill that was derived by your smart meter, it’s quite unlikely that this would be wrong. But once again, you can ask your provider to check again

If you’ve received an estimated bill and you’re convinced it doesn’t accurately reflect the energy you’ve consumed over the last month, then this is worth discussing with your provider in case your bill estimates can be adjusted

The only other type of meter reading you’re likely to receive a bill for is a ‘special meter reading’ in the event you’re switching providers between standard meter readings or you’ve just moved into a property and are now taking over responsibility for the bills.

Still think your energy bill is wrong?
See the steps you can take to dispute it in Canstar Blue’s billing guide.

Why would my bill be so high?

If you’ve accepted that your energy bill shock is likely accurate, it’s time to think about how you ended up with such a substantial bill.

Canstar Blue has listed possible causes for bill shock below:

Your energy rates have increased

Energy rates in Australia experience frequent changes. Your provider may have increased its charges without you realising – and now you’re paying for it.

Your plan’s benefit period has ended

If you initially signed onto an energy plan with a conditional discount for paying on time or by direct debit, you might find that the benefit period has come to an end and you’re no longer receiving that discount.

Your energy usage increased

Energy usage fluctuates depending on the time of year. For example, you might not think you’ve been using the air conditioner more than normal, but if the season changed from spring into summer, there’s a chance you have.

Three months between quarterly bills is enough time for energy habits to change. You can compare your household’s last quarterly energy usage with your previous usage on your last energy bill.

You still owe money from a previous bill

If you didn’t pay your last energy bill in full, it could be that the outstanding amount has been added to your new bill. This should be clearly noted as an outstanding amount rather than new charges.

In most cases, your energy bill shock will be because your energy usage has increased. whether that’s because it’s gotten hotter or colder between seasons, you’ve had other people staying with you and subsequently used more power, or your energy consumption habits have changed in another way over the previous months. To find out if that’s the case, look at the specific electricity usage figures on your previous bill compared to your new one. This shows how much energy per kilowatt hour (kWh) has been consumed.

Still not sure why your electricity bill could be so high?
Check out Canstar Blue’s top five reasons why your energy bill may be higher than usual for more tips.

What if I don’t have enough money to pay for it?

The problem with energy bill shock is that these bills can throw you off your budget, especially if it’s a large quarterly energy bill of $600+. If you’re struggling to find the funds upfront, most energy providers will grant a short extension of a week or two so you can recover from the shock and find the money you need.

If you need extra time to pay your energy bill, discuss payment plans with your provider. All energy companies have hardship policies that involve negotiating a payment schedule with customers based on what they can afford. This is usually only reserved for when customers regularly fail to pay their bills, so see how you go with a short extension first.

The most important step to take when experiencing energy bill shock is to speak with your energy provider and explain the difficulty you’re having.

Failure to communicate can result in your overdue balance being passed onto a debt collection agency and your energy being cut off.

See what other support may be available to you when you cannot afford your energy bill in Canstar Blue’s billing guide.

Original reporting by Jared Mullane
Image Source: fizkes/Shutterstock.com