In last week's blog we considered the best cost cutting initiatives to save money on your heating bill in winter. And while there are definitely some excellent methods of staying warm without having to have the heater on constantly, the fact remains that power prices are continuing to increase, which could definitely have an impact on your household budget no matter what measures you take to cut back on using power.
Thus, while substantial savings can be made by implementing power reduction initiatives at home, there is also the potential to save on your bills by ensuring that you are on a suitable energy contract.
An article in the Money supplement of the Sydney Morning Herald entitled 'Bright savings for energy hikes', by Lesley Parker (June 8, 2011), talks about what consumers should be looking for when comparing power contracts, particularly in terms of how companies charge for energy usage.
The article quotes Tim Wolfenden, the chief executive of www.makeitcheaper.com.au,who says that there are two key aspects for consumers to consider when comparing energy deals – the base rate and the discount offered.
For instance, a large discount may not be as generous if the base rate it comes off is high. A smaller discount off a lower base rate may actually be more cost effective.
Wolfenden also warns consumers to make sure they gain an understanding about any conditions that apply to discounting – for example, whether or not the discount is still valid if a bill is paid late, and to which portion of the bill (actual usage or fixed supply charges) the discount applies.
The article also mentions termination fees which too can cause issues for consumers when switching energy retailers, in a similar fashion to that when changing mortgage provider. Consumers must understand how much it is going to cost them to abort their current energy contract and change to another supplier, and to ensure that the process is in fact worth it – that is, that the reduced rate achieved on the new contract is not thwarted by the cancellation fees they must pay to their current supplier.
As like any household service, energy contracts change and you may not realise that you could be getting a better deal (and paying less) either by renegotiating with your current retailer, or by switching to a new company. In any case, it is usually a worthwhile exercise to research the energy options available to you at least yearly, to see if an alternative contract is available that saves you money. And in the current environment of rising energy costs, this exercise has never been more valuable.