The Hidden Costs of Energy Plans You Should Know Before You Switch
Switching to a new energy plan seems like an easy way to save on your bills. But not all plans are as simple as they seem. Lower rates or Sustainable energy options sound great but there are often hidden costs that will surprise you. Knowing these costs before you switch will help you avoid the extras. Here are some simple key points you need to know before selecting an energy plan.
1. Introductory Rates
Almost every energy company offers special offers and discounts for their new customers with low introductory rates. These rates are often much lower than the usual rates so the plan looks like a great deal at first. But these low rates only last for a few months. Once the introductory period is up the rates can jump up big time and wipe out any savings you made. Before you switch, find out how long the low rate will last and what the regular rate will be when it’s over.
2. Lock-In Contracts and Exit Fees
Some energy plans require you to sign up for a set term, often 12 to 24 months. If you want to switch to a different provider before your contract ends, you may have to pay an exit fee. These fees can be big, sometimes hundreds of dollars. This will wipe out any savings you thought you’d get by switching. Always check the contract terms and think if the savings are worth being locked in.
3. Usage vs. Supply Charges
When comparing energy plans it’s easy to focus on the usage rates—the amount you pay per kilowatt-hour (kWh) of electricity you use. But the supply charge—the amount you pay to have electricity connected to your home—is just as important. Some providers may offer low usage rates but high supply charges. Depending on how much energy you use, a plan with a lower usage rate but higher supply charge could end up costing you more. You need to calculate the total cost based on your energy usage to find the best deal.
4. Seasonal Price Changes
Energy prices can vary by time of year. In Australia, energy demand goes up in summer when air conditioning is used more and again in winter when heating is needed. Some energy plans adjust their prices during these peak times. If your plan has variable pricing, you could end up paying more during these times even if the average rate seems reasonable over the year. You need to understand how these seasonal price changes will affect your bill, especially if you live in an area with extreme weather.
5. Additional Fees
Besides the obvious costs, some plans have extra fees that can add up. These might be fees for a paper bill, late payment fees or fees to reconnect your service if it’s been disconnected. Some providers charge for paying by credit card or direct debit, adding a few extra dollars to your bill each month. These fees may seem small on their own but can add up over time and eat into any savings you thought you were getting by switching plans. Read the fine print and consider any extra charges when comparing plans.
6. Customer Service Matters
While not a cost, poor customer service can cause stress and wasted time which can feel just as expensive. Some providers offer cheaper rates but have worse customer service. If you have a billing issue or need help with your service, poor customer service can lead to frustration and can leave you out of pocket if issues aren’t resolved quickly. Consider the provider’s customer service reputation when making your decision as it will impact your overall experience with your energy plan.
7. Review Your Plan Regularly
One of the biggest hidden costs is being on a plan that’s no longer competitive. Energy plans and prices change regularly and what’s a good deal today may not be in a year’s time. Many Australians pay more than they need to because they haven’t reviewed their plan in a while. To avoid this, set a reminder to review your energy plan at least once a year. That way you can make sure you’re always on a plan that’s good value without any nasty surprises in the fine print.
Summary
Switching energy plans can be a good way to save on your bills but it’s important to be aware of the hidden costs that can eat into your savings. By knowing the traps like introductory rates, exit fees and extra charges, you can make a better decision and avoid the nasty surprises. Always read the terms & conditions, ask the right questions and review your plan regularly to make sure you’re getting the best deal. With a little planning, you can enjoy your new energy plan without any surprises.
