Tips for Finding the Best Energy Plan for Summer

As the summer heat kicks in, so do those electricity bills—especially if you're running the air con or other power-hungry devices. Whether settling into a new place or looking for ways to cut back on your summer bills, it's worth understanding how electricity prices work and what energy plans offer.

In this guide, we'll break down the different types of plans and tariffs, plus tips on picking the right one to keep your electricity costs in check this summer.

1. The Different Types of Electricity Prices:

When searching for an energy plan, the two main types of contracts are market offers and standard contracts. Each comes with different pricing structures and benefits.

Electricity prices - Market Offers:

Electricity prices under market offers are typically more competitive, often featuring introductory discounts, bill credits, or rewards programs. However, these benefits usually only last for a set period (frequently 12 to 24 months). Once the benefit period ends, electricity prices can increase as the retailer adjusts their rates. These plans are ideal for those willing to actively manage their energy usage and switch providers after the benefit period expires.

Electricity prices - Standard Contracts:

Standing offers, or default contracts, are government-regulated plans with less competitive electricity prices than market offers. But the upside is they offer stability—your rates won't change unless the government steps in. Many folks who haven't switched energy providers in a while end up on these by default. In places like New South Wales and South Australia, these are known as Default Market Offers (DMO). In Victoria, it's called the Victorian Default Offer (VDO), which is reviewed annually by the Essential Services Commission (ESC). Here's what you need to know for VDO, If you're in another state, see the Default Market Offer article.

• If you're on a standing offer, you'll be paying VDO rates.

• You can compare other deals against the VDO rates to see if you're getting a better deal.

• For embedded electricity customers, the VDO can be the highest price you'll pay.

The VDO applies to all customers in Victoria, while the DMO applies to those in New South Wales and South Australia on default contracts. You may pay higher electricity prices under a standard contract if you do not manage your energy plan actively.

2. Electricity prices - Fixed vs. Variable Rate Contracts: Which is Right for You?

When selecting an energy plan, one of the most important decisions you'll face is whether to choose a fixed or variable rate contract.

Electricity prices - Fixed Rate Contracts:

A fixed rate locks in your electricity prices for your contract, providing stability and predictability. This is particularly useful during the summer when electricity prices can spike due to increased demand. With a fixed rate, you know exactly what your bill will look like each month, but be aware that once the contract period ends, rates may increase.

Electricity prices - Variable Rate Contracts:

Variable rates are typically lower than fixed rates but come with the risk that electricity prices can change anytime. Your bill could fluctuate based on market conditions, weather events, or grid demand. While variable rates might start cheaper, they could become less predictable, especially during the summer when demand for cooling can cause electricity prices to spike.

A variable rate plan might work well if you're willing to monitor electricity prices and adjust your usage. However, a fixed-rate plan may be more suitable if you prefer stability.

Understanding the type of tariff that best matches your energy habits can help you optimise your electricity prices and reduce unnecessary costs.

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