Why High Discount Rates Don’t Automatically Mean Lower Electricity Bills

discount rates

Coal prices are rising steadily every year, and the average growth rate is 8.14%. Due to the rising coal prices, Australian consumers are receiving higher electricity bills. As per recent data, coal accounts for 75% of electricity generation in Australia. 

Everyone likes discounts, and electricity consumers also expect their energy retailers to offer discounts that lower their electricity bills. In fact, many people select plans with high discount rates hoping to get lower electricity bills. 

However, high discount rates don’t automatically mean lower electricity bills. Click here to know more about discount rates and their relation to electricity bills. 

Conditional Versus Unconditional Discounts

Australian energy retailers offer two types of discounts – conditional and unconditional discounts. The energy business is all about marketing, and energy retailers offer high discounts to entice customers and make their electricity plans stand out in the crowd. 

Conditional Discounts 

You are eligible for conditional discounts only if you meet certain conditions. Here are some conditional discounts you are more likely to see in cheap energy plans. 

  • Pay on Time – this discount is offered to customers who pay their electricity bills before a specified date. You may be able to save a few dollars every month by paying the bill on time, but if you are late, the electricity retailer will levy a hefty fine as a late payment fee. 
  • Pay by Direct Debit– This discount is available to customers who set up direct debit billing of their electricity bills. When you set up a direct debit, the bill amount is deducted automatically from your bank account. You need to mention sufficient funds in your bank account to cover the electricity bill. If your linked bank account does not have enough funds to pay for the electricity bill, the energy retailers might levy some fine. 
  • Receiving Bills by Email– Some energy retailers offer small discounts (a few dollars every quarter) to consumers who agree to receive electricity bills by email. Such conditional discounts are more beneficial to the energy retailers as they save on paper, printing, and delivery costs which are significantly higher than what is offered as a discount.
  • Discounts for Signing up Online – Some energy retailers offer discounts to people who sign up online. Such a conditional discount favours energy retailers as they save money by keeping lesser sales/customer service staff on the phones. 
  • Minimum Bill Amount – In this case, you will get a discount only if your bill amount is more than the minimum bill amount. 

Unconditional Discounts 

In the case of unconditional discounts, you don’t have to fulfill any conditions to get the discount. 

For example, the energy retailer may list the price of an energy plan at $100 but offer a 20% discount on it. Every billing cycle, you will get the $20 discount without having to meet any other conditions or requirements. 

However, most unconditional discount schemes are marketing gimmicks, and when you analyze the discounts, you will understand that they don’t result in big savings. 

If you want to lower your electricity bills, you need to look for plans that offer lower usage rates and electricity tariffs. 

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