Cold hard cash for switching your electricity bill

Right now, electricity companies are fighting HARD for your business. With sign-up incentives ramping up across the market, there is up to $400 in cashback up for grabs just for moving your plan.

But how do you decipher clever marketing from a deal that’s actually going to save you money on your power bills?

First up, what is a cashback deal?

A cashback deal is essentially a welcome present when you sign up with a new provider, think of it as the electricity equivalent of a gift basket when you check into a hotel.

While cashback offers are most famous among credit cards, sign-up incentives have expanded everywhere, from mortgages and health insurance to power plans.

Instead of a fruit basket or a glass of bubbles, energy providers are offering cold, hard cash credits loaded straight onto your electricity account, typically within the first three months of signing on as a new customer.

Let’s talk numbers: What’s on the table for switchers?

The short answer? A lot.

Sign-up incentives from energy retailers on the Canstar database have jumped in recent months, likely because data from the Australian Energy Market Operator (AEMO) shows switching activity is down. To try and get customers back into the game, providers are pulling out all the stops.

A total of 13 energy providers are currently offering sign-up incentives, with 11 of them handing over cash, or more specifically, a heavy dollar credit applied directly to your account.

Source: Canstar. Note: cashback deals list the maximum amount, however, the credit can vary depending on location and electricity and or gas plan. Other conditions may apply.

Up to $400 off your bills — so what’s the catch?

There are always catches! Before you leap, keep these key factors in mind:

• Dual-fuel requirements: To unlock the maximum credit, you’ll often need to switch both your electricity and gas. If you’re electricity-only, you might kiss goodbye to half the bonus.
• Location constraints: The maximum bonus amounts depend heavily on the state you live in.
• Waiting periods: Check the fine print to see how long you must remain a customer before the credit kicks in. While most providers apply it on your first bill or within 90 days, others stretch it out over a year.
• Higher rates: The biggest catch is that plans with sign-up bonuses don't always come with the lowest usage and supply rates.

If you're someone who switches regularly, these sign-up bonuses can work heavily in your favour. However, if you’re someone who prefers to ‘set and forget’, or has a heavy-use household, then it’s possibly better to focus on finding a plan that offers the lowest rates – not highest incentive.

Despite the potential savings, Australians remain notoriously loyal to their power companies. A recent Canstar survey of over 5,500 Australians revealed that just 15% of respondents had switched energy providers in the last two years, and the average time spent with a single provider was a whopping 8.9 years!

It’s no wonder retailers are throwing everything but the kitchen sink at customers to get them to move.

Cashback vs low-cost plan: Which comes out on top after a year?

To test whether a sign-up perk actually beats a basic, low-rate plan, Canstar crunched the numbers by comparing the lowest-cost plan available in a city (on the same network, at the typical usage) to the lowest cost plan with a sign-up credit. 

The results? Only two of the five cities we looked at had the plan with the credit coming out cheaper – which means for the remaining three cities, the more competitive option was one without any credit applied. 

Here’s how they stacked up: 

Source: Canstar. Annual costs for average household consumption as determined by regulators. Excludes wholesale electricity plans.

Free movie tickets and zoo passes: What other perks are on offer?

If cash isn't your thing, retailers are ladling on secondary perks and rewards:

Source: Canstar. Limited to specific locations and plans. Other conditions apply.

Tips to navigate your next power move

Ready to see if your current energy plan holds up – or perhaps make the switch and pocket some cash? Here are some tips:

• Compare against the reference price: Electricity plans are required by law to show how they compare to the government benchmark reference price. Use this as your baseline gauge.
• Use your most recent bill as a check: Grab a recent bill, or log into your provider’s website, and see what your typical energy use looks like. Knowing what type of household you run can help determine the best plan. 
• Call your existing provider: Big sign-up bonuses are strictly reserved for new switchers, but you shouldn't have to pay a "loyalty tax". Call your current provider, mention the new customer deals you’ve spotted elsewhere, and see if they’d be willing to extend that offer to you too. 
• Keep switching simple: Unless you're on a rare fixed contract, most plans don't carry lock-in contracts or exit fees. Switching takes as little as 5 minutes online, just fill out your details and your new provider handles the rest.