Could a prepaid energy subscription bring down your electricity bill?

Yep, energy retailers have been sparked by the subscription craze and are putting the power back in the consumers' hands.

Okay, I’ll stop with the energy puns now.

Currently, only Amaysim, Powershop and EnergyAustralia are offering energy subscription-style plans.

Amaysim CEO Pete O’Connell said energy subscriptions are structured like your mobile phone plan.

“Prepaid plans like amaysim’s subscription energy has a set monthly price, flat rates and no lock-in contracts to help alleviate bill shock and allow for better budget control,” he told Savings.com.au.

“Customers pay a fixed monthly price for a set amount of energy - just like their mobile. We want to revolutionise the way Australians think about and buy electricity.”

Mr O’Connell said the mobile phone industry has cracked the code with simple, flat pricing built around usage, and added safeguards to prevent bills from spiralling out of control.

“Unfortunately, the energy market has the hallmarks of the mobile sector of 10 years ago. Aussies are confused by electricity pricing structures, pricing comparisons and unnecessary billing complexities.

“Amaysim’s subscription electricity plans eliminate the issue of bill shock and energy anxiety by putting the power back into the hands of consumers. For this reason, we see them playing a vital role in the future of the energy market.”

How does an energy subscription work?

Kind of like how your phone bill does!

Most energy subscription-style offers allow customers to choose between a range of plans that vary by the number of people in a household and the amount of estimated electricity used every month.

Source: Amaysim

You pay the same monthly fee up-front every month, and you can purchase top-ups if your energy usage exceeds your monthly allowance. Any unused energy can be rolled over into the next month to ensure nothing goes to waste.

To monitor your energy usage, most prepaid energy plans require you to install a smart meter so you can track your daily use.

Depending on the energy provider, you may be asked to upload an electricity bill or enter your home address so the provider can recommend the most suitable plan for you.

Some energy subscription plans, such as Amaysim, don’t include any supply charges, so you only pay for the electricity you use.

There are no lock-in contracts, no confusing discounts and according to Amaysim, customers won’t ever “waste a cent”.

As a rough guide, for a household with 1-2 people, 240kWh is provided for $80 a month, a household with 3-4 people gets 340kWh for $110 a month, and for bigger households with 4-5 people 660kWh is provided for $170 a month. Households with more than five people get over 1,000kWh a month for $260.

Do the savings stack up?

The premise of prepaid energy is simple: pay a flat monthly fee for a fixed amount of electricity usage. But comparing it against traditional rate-based style plans is a little harder, because they’re two different models but we’ll give it a go.

Case Study: Let’s use Anna Gee as an example. She lives by herself in a two-bedroom apartment in the inner city of Brisbane. In summer she has the aircon cranking 24/7 which pushes up her bill but on average, on her current Amaysim energy plan, she uses an average of 217kWh a month.

Now let’s compare that to Amaysim’s small plan, which is $80 a month for 240kWh. If she keeps using 217kWh a month, she’ll be about $14-odd better off per month, and also have 23kWh extra electricity to play with. Keep in mind that this is for a Brisbane-based single rate peak tariff, and rates can and do change all the time.

But it’s important to keep in mind that’s just Anna’s average electricity bill. Depending on the time of year, it can be significantly lower or higher than that, particularly in winter where the air-conditioner wouldn’t need to be used as much.

If she uses more than her 240kWh allocation, she could be stung. For example, Anna’s most recent electricity bill was more than $100 for 392kWh for the month because she had the aircon running a lot and also used the dryer everyday.

• If Anna was on the small plan, she would have to buy an auto top up which is $20 for an extra 55kWh.

• That would bring in her bill at $100 and 295kWh - but it’s not done yet. Additional use is rated at 33.33c/kWh, so an extra $32.33, for a total of $132.33 for 392kWh.

• Because Anna didn’t anticipate her increased usage, she was worse off by more than $50 for that month - if she was able to predict her usage, she might have been better off on another plan.

Conversely, in winter Anna normally pays around $50 - $65 a month for electricity because she’s not running the aircon and let’s face it: it’s Brisbane so it’s hardly cold enough to warrant using a heater. If Anna was on Amaysim’s small plan, she would be spending an extra $20 or more a month for energy she’s not using.

• However, any unused energy gets rolled over month-to-month, so there could be a nice little reserve built up for the summer months.

“Unlike some other plans on the market, there are no hidden charges or on and off-peak pricing structures, and no hidden fees,” Mr O’Connell said.

“Rates are competitively priced and you can track your household usage via Amaysim’s app, providing critical insight into your use and adjust behaviour in home accordingly. In fact, we encourage consumers to go to our website and upload their bills to see for themselves how their current plan compares to our subscription model.”

Amaysim also lets customers upgrade or downgrade their prepaid plans via the app, meaning they could get ahead and prepare for the summer months, rather than risk going over their limit, if they know they’ll be using more electricity.

Savings.com.au’s two cents

The verdict? Okay so the purpose isn’t necessarily to save money on your electricity bills, but more to prevent bill shock and make budgeting for bills easier.

While an energy subscription can make you more conscious of the amount of electricity you have for the month, it won’t necessarily stop your bills from going up if you regularly exceed your monthly usage because you’ll be charged a top up fee, with higher tariffs than Amaysim’s post-paid plans. This may not end up being the best value, especially if you’re consistently exceeding your plan amount. However, if you anticipate your usage and adjust your plan by the seasons, you could save money, but you’ll need to be vigilant.

The best way to stop your electricity bills from rising is to reduce your energy usage as much as possible, which could save you significantly more money.

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