How flexible pricing works
Electricity customers now have a choice between flat rates and new flexible electricity pricing. Flexible pricing means different rates for electricity at different times of the day. You don’t have to switch to flexible pricing – the choice is yours.
If you choose a flexible pricing offer, different rates will apply at different times throughout the day. The higher rates will be during peak times and the lower rates will be during shoulder and off-peak times. You can pay less for your power by using electricity outside of the peak hours.
Visit the Switch On website to find out if flexible pricing could work for you.
The website includes the Victorian Energy Compare tool, which helps you understand how the new flexible electricity pricing options could work for you, and allows you to make an informed decision regarding the choice between flexible pricing and flat rates. You can now compare gas and solar offers too.
Victorian Energy Compare can help you save money on your energy bills in four easy steps.
- Visit Victorian Energy Compare Make sure you have a recent electricity or gas bill handy.
- Answer a few questions about your energy use.
- Look at the available offers we find for you.
- Compare, switch and save.
It only takes a few minutes and could save you hundreds of dollars every year.
You can also explore how shifting the time of day you use electrical appliances can lead to savings under flexible pricing.
Facts about flexible pricing
- Flexible pricing plans are now available through participating electricity retailers.
- Changing to flexible pricing is voluntary.
- You need a remotely-read Smart Meter to access flexible pricing – contact your electricity retailer to find out if your meter is ready.
- You can only change to a flexible pricing plan if you provide your consent to an electricity retailer – either in writing or verbally.
- More details are available on the Switch On website.
An example of a flexible pricing plan
The following diagram is an example of a flexible pricing plan that electricity retailers are likely to offer. Retailers will be able to offer a range of flexible pricing plans. You will need a remotely-read Smart Meter to access flexible pricing through a participating retailer. Contact your retailer to see if your meter is ready.
Small businesses may be offered different rates, and terms and conditions, to residential customers and the peak and off-peak times may vary to match typical consumption patterns.
Peak: The price of electricity is higher during the ‘peak’, typically on weekday afternoons and evenings, when the demand for electricity is the highest.
Shoulder: The price of electricity is lower than the peak rate and higher than the off-peak rate, when there is a reduced demand for electricity.
Off-peak: The price of electricity is lowest, when the demand for electricity is the lowest.
Contact your energy retailer to find out the rates and what times they are available to you.
The above example is for illustrative purposes only. Electricity retailers may vary the flexible pricing timeframes and rates on offer.
Flexible pricing is voluntary
You can remain on your current rate or choose to switch to flexible pricing. You can only change to a flexible pricing plan if you provide your consent (either written or verbal) to an electricity retailer.
Deciding whether flexible pricing is right for you
Flexible pricing has the potential to save people money, but will not be right for everyone. Be aware of your energy use patterns. If you use a lot of electricity at peak times and can’t change the times you use it, flexible pricing may not be right for you.
Get an understanding of how the flexible pricing options could work for you with Victorian Energy Compare on the Switch On website.
Changing your mind
You can switch from flexible pricing at any time. However, depending on the contract you have accepted, you may have to pay some additional fees or charges. Discuss any potential costs associated with moving back to your previous plan or another plan with your retailer before accepting a new plan.
If you are thinking of changing from flexible pricing, you may want to check offers from other retailers – use the Victorian Government Victorian Energy Compare tool to see the best offer for your household. Make sure to check contract conditions before you agree to switch retailer. If you are a small business, your contract or plan may have different conditions – check with your retailer.
Why flexible pricing has been introduced
Flexible pricing has been introduced to provide you with more choice and control over your power bill. More broadly, flexible pricing provides an incentive to use power at times when there is less demand for electricity, reducing the need for expensive energy infrastructure upgrades – a cost that is passed on to all consumers.
Research on consumer impacts
To see what impact flexible pricing will have on vulnerable or disadvantaged groups within the community, the Victorian Government commissioned two Customer Impact Studies (2011 and 2012).
The studies found that vulnerable or disadvantaged groups have almost the same potential to benefit from new pricing rates as other electricity customers. The study also found that if people changed their energy usage in response to flexible pricing, most customer groups would benefit.
However, the impact of flexible pricing will be different for each individual consumer – so remember to compare the range of offers on the market, both flat and flexible pricing offers, to find the best rate that suits your individual needs.
By using the Victorian Energy Compare interactive price comparison tool on the Switch On website, you can see if flexible pricing options could work for you, and compare both flat and flexible retail offers.
Access to flexible pricing
You will need a remotely-read Smart Meter to access flexible pricing through a participating electricity retailer. Contact your retailer to find out what flexible pricing plans are available to you. You can also use the Victorian Energy Compare tool on the Switch On website.
Those already on time-of-use pricing
Residential and small business customers who already have some form of time of use rates for their electricity usage, will remain on their current rates, unless they choose to move to a new flexible pricing offer.
This includes those customers currently on peak and off-peak rates for specific appliances such as electric hot water and heating.
The introduction of flexible electricity pricing refers to the new flexible electricity plans that are available now.
These new plans may differ from those currently available.
These differences are likely to include peak, off-peak and shoulder periods with different rates, and the fact that with the new flexible pricing rates all electricity use during those periods will be on a flexible rate, not just the specific appliance/s currently connected to a flexible price rate.
Frequently asked questions
Is flexible pricing voluntary?
Yes. Flexible pricing is voluntary. The choice to switch is yours. Your energy retailer will not move you to flexible rates without your consent.
Can I change my mind?
Yes. Households that switch to flexible pricing can switch back to their previous rate structure without incurring an administration fee until March 2015. However, some fees may apply – visit the Switch On website for more detail.
How will I know if flexible pricing is right for me?
Flexible pricing plans have the potential to save people money, but will not be right for everyone – especially those who have high usage at peak times.
You should carefully consider whether you will save money before switching.
Are the new flexible rates higher than the current flat rates?
There will be a mix of low and high rates for different times of the day.
The highest rate - the peak rate - will apply when the cost of delivering power is the highest.
The lowest rate - the off-peak rate - will generally apply overnight.
There will also be a shoulder rate, between peak and off-peak.
This will give consumers the opportunity to save money by shifting the time they use their electricity.
What will the rates be?
This will be a decision for the energy retailers. The energy market in Victoria is deregulated, so the Government does not set prices. Contact your energy retailer to find out the rates and what times they are available to you, or use the interactive price comparison tool, Victorian Energy Compare, on the Switch On website.
Can you give me some examples of potential savings?
Below are some examples of potential savings if you can switch your major appliance use from a flat rate to an off peak rate.
- Running a typical dishwasher at off peak instead of a typical flat rate could reduce your running costs by $20-$40 a year (assumes daily use, 3.5 star appliance).
- Running your washing machine at off peak instead of a typical flat rate could reduce your running costs by $30-$60 a year (assumes 3.5 star appliance, 7 kg washing machine, used 4 times per week)
- Running your clothes dryer at off peak instead of a typical flat rate could reduce your running costs by over $50 a year (assumes 1.5 uses a week, 8 kg, 1.5 star appliance).
- If all of these appliances were consistently operated at off peak times instead of on a typical flat rate, a household could reduce the cost of using these appliances by up to $100-$150 a year.
I already access peak and off-peak rates: how does it affect me?
Approximately 12 per cent of residential consumers and 20 per cent of small business customers already have some form of flexible rates for their electricity usage. This is in addition to the 20 per cent of Victorian consumers who have peak and off-peak rates for specific appliances such as electric hot water and space heating.
The new flexible pricing options will offer more choice to consumers with Smart Meters.
Flexible pricing will apply to all electricity usage, not just specific appliances as commonly occurs with peak and off-peak pricing today.
How do smart meters work with flexible pricing?
Smart Meters generate a lot more information for consumers. Electricity consumption readings are taken every half hour instead of 4 times a year and are typically transmitted to your provider around 4 to 6 times a day.
A Smart Meter enables flexible pricing rates. You will be billed based on when and how much electricity you are using.
How do interactive devices work with flexible pricing?
Interactive devices such as web portals and in-home displays are becoming increasingly available to energy customers.
These tools provide you with more detailed information about your energy consumption throughout the day, helping you make more informed decisions when considering flexible pricing plans.