NEWS & OPINION

How to compare one energy discount against another

Not all energy discounts are created equally! Learn why a 30% off discount may not always be better than 25% off your energy bill.

OCTOBER 22, 2018
CARL PRINS

Understand when a bigger discount does not necessarily mean a greater saving.

The first thing you should know about discounts is that they are not all the same. 

Since electricity markets were deregulated, retailers set the top line price, which they then discount. 

So, if one retailer is offering you a 25% discount and another retailer is offering you 30% it is not necessarily better to go with the higher discount!

Let’s do an example:

  • Retailer 1 offers a 25% discount on usage charges of 30c/kWh
  • Retailer 2 offers a 30% discount on usage charges of 35c/kwh

If I use 1,500 kWh in the quarter, my result is as follows:

  • Retailer 1: $450 – $112.5 (Discount $450 x 25%) = $337.5
  • Retailer 2: $525 – $157.5 (Discount of $525 x 30%) = $367.5

In this example Retailer 2 is actually $30 more expensive, even though they are offering a greater discount!

A large number of discounts are also contingent upon you paying your bill on time. If you accidentally do not pay on time, you are $75 worse off (i.e. the full $525 vs $450).

With the Handled app we take discounting and the rates you pay into account when creating your personal comparison.

You see your estimated annual cost inclusive of any discounts. This makes deals directly comparable and easy for you to choose amongst the available options.

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