Guides & Resources

As Much As Discounts Sound Appealing; Are They Really Giving You Money For Nothing?

As humans we are naturally attracted to anything that says “discount” or gives us a means of getting the cheap deal.  But is it really a great offer?  Or is it just a higher price disguised as a discount?

There has been much talk in the energy industry about this and both the Government and energy retailers are cottoning on to it.  So, it’s probably time that as consumers we also get a bit savvy with knowing what we are being charged for.

Let’s go straight to pay on time discounts.  On your bill you will see two different amounts – one is how much you owe. The second amount is how much you will owe if you pay on or before the due date, a lesser amount.  That’s great if you pay on time, but what if you don’t?  Well, not only does the amount go up to the first amount – the higher price – but you are also more than likely to be charged a late payment fee.  Your electricity or gas bill just took a massive price hike!

So how much does your energy really cost?

Some people would say that it is the lower rate, the “discounted rate.”  It’s not really a discount, it was always going to cost the lower rate.  The higher rate encourages you to pay on time because who wants to pay more for the same thing?  The effective, “Pay Late” price is actually an additional fee packaged as a higher rate.

Other discounts that you may be entitled to are paid by direct debit or for receiving your bill via email rather than post.  These reductions are often more realistic because the energy retailer is passing on the savings they make to you, the consumer.  Direct debit attracts minimal or no fees from the banks compared to paying by a credit card who charge a percentage fee.  Similarly, sending an automated email with your bill costs next to nothing compared to sending your bill by post.

But energy suppliers seem to be paring it all back and getting back to basics.  Nine News recently reported on the notion of “no frills” gas and electricity.  In the same way that supermarkets offer a “home brand” alternative to the bigger brands (of the same/similar product), retailers are now saying that there is no discount, no reductions.  The price is the price.  This means that the energy is charged at the lowest tariff possible.

You may be locked into the rate for 12 months, which can be beneficial if energy rates rise, but at least you will know how much your electricity is costing.  Plus, companies can still give you direct debit and e-billing discounts, regardless.

Craig Memory of the Public Interest Advocate Centre spoke to The New Daily about these discounts.  “The way the contracts work is that people get the pay-on-time discount for the first year and then it disappears.”  He urges people to shop around for a better rate as after the first year their energy bill increases.  Sites like can offer these comparisons and work out whether you would be better off with a basic cheaper energy rate or if you can take advantage of a discount or lower rate.

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