Things you should know when shopping for energy retailer...

If you are looking into switching your electricity or gas retailer, below are some factors that you may want to look out for. If you are a large energy user (such as a manufacturing plant or factory), the offers that you receive may be more complicated than that of a residential or small business (such as a printing firm or small cafes). I have come across many businesses who do not understand the offers or understand the implication of the offers to their electricity or gas expenses. The most important aspect before entering into a contract (especially for a long-term) is you must understand the offer and if you have any doubts, do not hesitate to ask the retailer.

1. The rates for your energy usage

The electricity rates are usually quoted in $ or cents per kilowatt hour (kWh) and the gas rates are usually quoted in $ or cents per megajoules (MJ). This is usually quoted pre-GST.

For electricity, you may be quoted an anytime rate (all time usage 24 hours 7 days a week) or rates with peak and off peak components depending on your underlying meter type. The rates quoted in cents per kWh are charges for your actual consumption of electricity.

2. Service to property charge or supply charge

This is a fixed charge usually quoted as $ per day or $ per year charge. This is the charge for the distributor standing charges, metering charges and retail service fee.

3. Any other additional charges

Did the retailer quote you any other charges in addition to the energy rates and the service to property charge? If they do, remember to enquire the reasons for the additional charges.

4. The service of the retailer

- Do you like the service of the retailer of your choice?
- Did they resolve or reply any queries that you have in a timely and professional manner?
- Do the sales persons have a clue to what they are talking about?

Service can also be important especially if you are trying to resolve an issue with the retailer. You would want a retailer that can resolves the issue in a friendly, professional and timely manner.

Seriously for a small user like myself (spends less than $200 every quarter), I wouldn't mind paying a little bit more to have good customer service. As a small user, difference in rates may mean a small discount in the range of $10 to $50 per year so I probably wouldn't mind sacrificing that rather than suffer heartache and frustration later on or even before I join them (read my previous blog on my experience when I was shopping around).

5. Billing cycle

Normally residential and some small businesses are billed quarterly (for electricity) or bi-monthly (for gas) as the distributors try to read the meters every 2 or 3 months. However, there are retailers who may bill you on estimates every month and adjust the bill once the readings for your actual reads come through. If you like to be billed on actual reads only, remember to inform your retailer.

6. Term or length of contract

What is the term of the contract? Do you have to sign up for a 3 to 5 years contract to receive the energy offer?

Remember, you can negotiate the term of the contract with your retailer if you do not wish to be locked in a contract for a period longer than what they have offered. This is important as breaking the contract before the term may incur a termination fee.

7. Termination Fees

This is a very important component that many people tend to overlook when signing up a contract. As you are most likely to be entering into a contract with the retailer of your choice, some contracts may come with a termination fee if you do not stay with them till the end of the agreed term. Termination fees can vary and for larger businesses, it can be a very costly expense to the business. Some retailers charge up to 1 to 2 months of your average electricity bill depending on the offer or product that you have been offered. This termination may come up to thousands of dollars if you are a large user of electricity or gas.

8. Any other discounts or credits

Sometimes retailers may have a promotion such as a once-off rebate for direct debit, a once-off welcome credits, a yearly loyalty credits, prompt payment discount and other giveaways.

Prompt payment discount is a good savings only if you always pay your bill on time or paying through direct debit.

If you are a small user of electricity or gas (average spend of less than $250 per quarter), then sometimes an offer of 10% of your rates may be less attractive than a $100 credit off your bill. So remember to work the numbers out first before you sign up with any retailer.

Happy Shopping!