Pre-paid energy plans, reminiscent of pre-paid mobile plans, sound like a thing of the past. However, this style of payment is becoming an increasingly popular way to pay your energy bill. More and more Australians are adding their energy bill to their list of monthly subscriptions, along with their gym membership and Netflix account.
But why? Are there any benefits to paying in advance? We’ve got the answers to all your questions about pre-paid energy plans.
How do pre-paid energy plans work?While it varies between providers, pre-paid energy plans will typically estimate a monthly cost for your energy bill based on your past usage and the average usage of your household size.
This amount will be the consistent fee for your energy, charged each month in advance. If you use less than your plan allows for, the excess amount will roll over into the next month while spending more than accounted for can mean paying the excess at a higher rate.
What are the benefits?These pre-paid plans are generally offered at a discounted rate and tend not to include any hidden fees, such as supply charges. There are no lock-in contracts and it’s possible to upgrade or downgrade your pre-paid plan in anticipation of greater energy use in the summer, for example, due to air-conditioning.
Another helpful feature of these pre-paid plans is that they facilitate the monitoring of your energy usage. Many pre-paid plans require you to install a smart meter in your house, which can display your up-to-date energy usage online or through an app. Having a heightened awareness of the energy you’re using can make your household more diligent about turning off switches that are not in use or taking shorter showers, especially when the rewards of greater conservatism can be seen at your fingertips in an app.
Will a pre-paid plan save me money?You may be wondering why these pre-paid plans are touted as money-saving if the cost of your pre-paid plan is based off the amounts you were spending on energy anyway only now with greater fees for going over your limit.
The utility of pre-paid plans varies from consumer to consumer. If you trust yourself to monitor your usage throughout the month and stay within your allowance, it’s likely you will find yourself spending less on your bill simply because you are more careful about the energy you use. However, if it’s likely you will forget to keep track of your usage and regularly need to pay fees for exceeding your allowance, then a pre-paid plan will be more of a detriment to your energy costs.
Our recommendationOverall, it seems that the purpose of these prepaid plans is less about saving money and more about reducing bill shock and making it easier to incorporate energy costs into your budgeting. If having greater control over your expenses strongly appeals, then a pre-paid energy plan might just be the way to go! Compare all the best pre-paid energy plans on the market today.