I have recently gone through the process of reviewing my electricity pricing and thought I would share my process. I have used the same process for several years now and it has worked every time, enabling me to get much cheaper electricity.
What generally prompts me to take action is the annual letter from my current provider telling me that my prices are increasing. Sometimes by much more than inflation. Thanks to all the options we have available to us now, I play the providers off against one another as they all want my business.
Step one: Contact your electricity provider
After receiving the price increase notification I contact my current provider. This is important. Reason being is you want as low a price as possible to begin your negotiations from. A lower reference point should result in a more competitive offer. If you ignore this step and phone over providers, then your starting point will be higher.
Phone up your provider. Often you may be on hold for a long time here. I was on hold for almost an hour last time I did this but I refuse to let them win! Hang in there. It will be worth it. Let them know that you are a loyal customer and tell them you are not accepting this price increase. Then ask them what is the best price they can do for you. After receiving that offer ask them if they are sure they cannot do any better.
They often say they can’t do any better at this stage. At this stage you are not confirming anything. You are walking away. Let the operator know that it is still quite high and you will be looking at your other options. You may find they may make another offer on the spot. Others may let you shop around.
Now you have your starting price from which to use as a reference point when shopping around.
Step two: Compare prices
Look online at other companies’ prices. With electricity there are two important prices to look at. The daily fixed charge and the per unit of electricity (kw/h) charge. It is the combined cost of these two that you should be looking at. When making your comparison also be aware that some companies include GST in their pricing, whereas most do not. Websites such as what’s my number may be useful here, as is going directly to the suppliers’ website.
I also have a handy spreadsheet that you can compare prices with.
Step three: Confirm pricing with your preferred option
Phone your favourite options. You will notice that they answer the phone straight away. Funny that when you push the number for new customer they answer straight away, yet push the extension for current customers and you have to wait for hours. I digress.
The purpose of this call is to get an even better price than the advertised price from your shopping. Even if the advertised price is better than your current provider, you can still be cheeky and ask for better. The advertised price is not always the price you have to pay. I am currently paying well below the advertised price with Genesis. Common requests to get my business may be a one-off payment, lower per kw/h rate, or a larger prompt payment discount. I ask for all three. If you are prepared to commit to one company for a year, then they are much more likely to offer you a better deal.
This will create as large a gap as possible between your current companies offer and your new offers. This helps with negotiating when you go back to your current company.
Step four: Ask your current electricity provider for a better rate
Step four: Don’t just accept this lower offer from the new companies. Go back to your current provider and let them know. I got this offer, can you beat it? Give them a chance to lower the price even further and keep your business.
Some will say no at this stage. Others may do something better.
If they offer something better then that is probably a great price that you should accept. I have found that sometimes they aren’t prepared to beat the other offer here. That is when you need to be prepared to walk away. Tell them that you will be changing companies.
Step five: Select the best priced option
No step five if you have accepted your current companies best offer. If you received no better offer in step four, then here you will proceed and select a new company.
The new company will need to get in contact with your current company and let them know you are switching. They complete the process for you. This is where things get interesting. Your current provider previously may not have believed you would walk. That’s why they didn’t offer you a better offer in step four. But now they know you are not mucking around!
Once they hear from the new provider, expect a call from them. They have phoned me every single time I have done this. Every time offering me a much better deal. I then accept this deal and stay with my current provider.
I’ve done this 4 times in the last 4 years and I am paying less in electricity than I was 4 years ago thanks to sign up bonuses and low unit rates.
Final thoughts
So there you have it. My process to getting cheaper electricity. The same will work for gas, as well as other monthly bills such as insurance and internet.
Of course you can also lower your usage. That has been covered extensively elsewhere.
I’ve found it’s important to record the date and time of every phone call as well as who you spoke to. Then there will never been any argument as to what was offered by who and when.
Phoning works much better than simple online comparisons or emails. Use your voice and put them on the spot. It can take a few hours to do this, but it is only once a year. If you weren’t doing anything important with that time anyway it is well worth it.
You should be able to save at least $200 a year than if you just copped the automatic increase. There are so many electricity providers now. Use that to your own advantage. Many of them have the same fixed costs, so adding a new customer does not have to be expensive for them. You can get a good deal, and let another customer who is not willing to do this pay top dollar.
Your current provider will give you the impression they will let you walk right up until they get that phone call from the new provider. Be bold and take it all the way to that stage if needed. More often than not you will find your current provider come grovelling. Take that call and let them get on their knees just for making you work so hard.
The information contained on this site is the opinion of the individual author(s) based on their personal opinions, observation, research, and years of experience. The information offered by this website is general education only and is not meant to be taken as individualised financial advice, legal advice, tax advice, or any other kind of advice. You can read more of my disclaimer here