Reduce your energy bills

Step one: Be informed

How much can you save?

By using energy wisely and adopting smart energy saving measures, you can save money, reduce greenhouse gas emissions and cut down on energy wastage at home while meeting your needs for convenience and comfort.

Whether it’s washing clothes in cold water, adjusting your thermostat or turning off power at the wall – it all adds up. An average family of four could be saving hundreds of dollars a year by making just a few changes.

Examples of possible savings over one year include:

• Washing clothes in cold rather than hot water could save you around $90
• Getting rid of the second fridge could save you around $180
• Using a clothesline instead of an electric dryer once a week could save you around $55
• Switching off appliances at the power point could save you up to $100.

If you need to upgrade a major appliance, buying an energy-efficient one is often a worthwhile investment over the life of your product. For example, by replacing your electric storage hot water system with a solar hot water system, a family of four could save over $400 a year.

These amounts are a guide only. Exact savings will vary depending on the age of your appliances, the size of your home, the climatic zone you live in and the energy prices you pay.

What impact can I have?

Households produce 21 per cent of Australia’s carbon pollution. That means the average Australian household creates around 14 tonnes of greenhouse gases a year, including private transport use.

So every household that takes action large or small is not only helping their hip pocket, but also contributing to Australia’s efforts to tackle climate change and build a clean energy future.

What’s powering the price rises?

Electricity prices have risen significantly over the past four years and are expected to increase further—largely due to increases in electricity network infrastructure costs.

The ‘network’ is the transmission and distribution system of poles and wires that carries electricity to your home. The repair and replacement of ageing poles and wires, increased peak demand (periods placing the highest demand on energy use—such as hot summer days), population growth and rising standards for power reliability are all contributing to the network cost increases.

The way we produce and distribute energy is also changing.

• New developments in the energy market, like the introduction of new technology to make our supply systems smarter and to help us better manage our energy consumption and the growing use of renewable energy like wind and solar, all involve up-front investment and costs.
• The introduction of a carbon price to drive investment in renewable and less polluting energy options at least cost to consumers is also expected to involve a small increase to average household energy costs - around $3.30 a week for electricity and around $1.50 for gas over the first few years. There is financial assistance for households to help cover these costs.

Over the long term these developments will give us a more reliable, modern and efficient power industry and help to build a clean energy future for Australia.

While a range of factors will continue to affect electricity prices, you can save money by reducing your energy consumption. Now is a great time to become an energy-efficient household through simple actions and practical know-how.

Key factors impacting your energy bills

A range of factors determine the amount of energy used in individual households. Some reflect changing lifestyle preferences, while others relate to the climate and the type of housing where you live.

For example, over the 15 year period from 1993 to 2009, the average size of a new house in Australia increased from 189 square metres to 245 square metres—one of the largest in the world. At the same time, the number of people per household has decreased, further increasing energy use per person. Together, these changes have increased energy use per person because it takes more energy to heat and cool a large house and that increased cost is paid by fewer people.

Home entertainment is another area of energy use that has grown rapidly with an amazing range of televisions, DVD’s and gaming consoles now in use in many Australian homes.

The main factors impacting your energy use include:

• The local climate where you live—including the range of temperatures throughout the year and the requirements this places on heating, cooling and other appliances.
• The total size of your home, the number of rooms and whether you live in an apartment, townhouse or freestanding home.
• The design of your home—including its orientation and whether passive heating and cooling opportunities are used. For example, living areas and windows facing north and summer shading on the western side of the house to reduce need for heating and cooling.
• Features and appliances—the size, number and energy efficiency of your major appliances including entertainment items, computers and additional fixtures such as a pool, spa and outdoor entertainment areas with additional lighting. The more appliances you have and the more you use them, no matter how efficient they are, the more energy you will be using.
• Habits and lifestyle—the behaviour of the people in your house including how much heating, cooling, cooking, showering, washing and clothes drying is done.

While you may have to live with some features in your present home (such as size and orientation), you can still take advantage of local conditions and make your home function as efficiently as possible. For example, during the hotter months it makes good sense to take advantage of passive cooling including opening windows to let in cooling breezes and the use of ceiling fans to circulate air and reduce the need for energy hungry air conditioners.

One of the most important times to consider energy efficiency is when you are planning changes to your home, or building a new one. Building an energy efficient home should cost no more than a conventional home. The decisions you make at the design stage could help to ensure that you don’t build in costly energy bills for years to come. LivingGreener and Your Home have a range of resources to help you increase the comfort of your home as well as reduce energy costs and carbon pollution.

Step two: Get ready

Understanding your energy bill

The best way to manage your energy use is to measure it. Your energy bill contains the information you need to monitor how much gas or electricity you are using.

Understanding your energy bill will help you to assess your energy use patterns and levels so you can begin to make changes—and savings—around the home. For example, by comparing your usage from the same period in the previous year, you can get a picture of your energy consumption in different seasons. If your use is high in winter or summer, you might want to look at the reasons and some options for reducing it.

What are watts, kilowatts and megajoules?

Before you start, it helps to understand the way power is measured.

• Electricity is usually measured in watts—one watt burns one joule of energy per second. A kilowatt (kW) equals 1,000 watts. A megawatt (MW) equals 1,000 kilowatts.
• The amount of electricity used over a certain time period is typically given in kilowatt hours (kWh). In one hour, a 500 watt appliance will consume 500 watts or 0.5 kWh of power.
• Gas is measured in megajoules per hour (MJ/h). A megajoule is 1000 joules.
• The amount of gas used by an appliance over time is measured in megajoules. In one hour, a 20 MJ/hr appliance uses 20 megajoules of power.

What's your energy bill telling you?

The features on electricity and gas bills vary depending on who your retailer is—but all bills have key details in common. The important terms to understand are:

• Average daily usage. This is measured in kilowatt hours (kWh) for electricity and megajoules (MJ) for gas. It’s normally illustrated on your bill with a bar graph. To get an idea of how much electricity your household uses you can compare against your state’s average. For example, the average household in NSW uses 7,300 kWh a year.
• Greenhouse gas emissions. The greenhouse gas emissions from the energy used—usually measured in tonnes and illustrated on your bill by a line or bar graph. See how you compare—the average Australian household emits around 14 tonnes of greenhouse gases a year, including personal transport.
• Charges for this bill. The breakdown of the charges in your bill. This includes the type of tariff (peak or off-peak), different meter charges, variable and fixed charges, rebates and GST.
• Fixed charges. The costs involved in supplying power including pole and wire maintenance for electricity and pipelines for gas. It also includes costs such as providing a 24-hour control centre and emergency teams to ensure safe and reliable power supply. These costs are calculated daily and shared equally by all customers regardless of how much energy they use.
• Variable charges (consumption charges). Relates to usage—the amount of energy consumed by a particular household.
• Renewable energy tariffs (GreenPower). Additional charges for households that have signed up for a portion of their electricity to come from renewables such as solar, wind or biomass. You pay extra for GreenPower. Available through most energy retailers—look for the GreenPower logo and tick to ensure its part of the government accredited program.
• Time-of-use tariffs. Different pricing arrangements for electricity depending on the time of day—usually divided into peak, shoulder and off-peak. Check to see if your retailer offers this option.
• Off-peak hot water. For electric hot water systems. Conditions apply including a special meter. Check to see if your retailer offers this option and that it suits your type of hot water system.
• Inclining block tariffs (IBTs). Energy use is split into blocks with different pricing up to a defined threshold or limit. The first block from 0 (zero) up to a set limit (e.g. 1,500 kWh) is priced at a lower level. The second block (e.g. from 1,500 kWh to 3,000 kWh) costs more. This pricing structure will be shown on your bill if used by your energy retailer and provides an incentive to keep energy use down.
• Regulated and market contracts. Regulated (or ‘standard’) contracts refer to contracts based on retail prices set by state and territory economic regulators. Market contracts are negotiated between the retailer and you. But even market contracts include some regulation as network charges are regulated by the Australian Energy Regulator. Contact your retailer to find out what kind of contract you are on. To minimise the price you pay for electricity, shop around and compare the deals that might be available in your area.

If you want to know more, the Australian Energy Regulator has detailed information for households on understanding your bills, the energy market and contracts.

Electricity prices explained

The fixed costs included in your electricity bill are made up of four components:

• Generation costs—creating electricity at a power station.
• Transmission costs—building and maintaining the extensive high voltage powerline infrastructure.
• Distribution costs—building and maintaining the network of poles and wires that deliver electricity to homes and businesses.
• Retail costs—connecting customers, billing customers and managing accounts.

These costs are regulated by the Australian Energy Regulator and relevant state bodies to ensure consumers are protected. The rate you pay for electricity and gas (the variable component of your bill) depends on where you live in Australia.

Identifying energy hot spots around the home

To reduce your electricity and gas bills you need to know where you are using energy.

The major sources of energy use around the typical Australian home are spread across heating water, heating and cooling and refrigeration and other electrical appliances. Stand-by power, lighting and cooking generally make up most of the rest of your household energy bill. Growing sources of energy use around the home include air conditioning, entertainment systems, computing, pools and spas, and outdoor lighting.

To make the biggest impact on your energy use and costs:

• Target the biggest sources of energy use around your home first—such as hot water and heating and cooling.
• Identify ways you can carry out household functions more efficiently. This includes correct installation and placement of equipment, and keeping it well maintained.
• Look for the high impact, no and low cost changes you can make easily.
• When replacing or upgrading household items, consider the most energy efficient option you can afford.

Step three: Take action

Making the switch—compare electricity and gas market offers in your area

One way to reduce your electricity and gas costs is to shop around to see if you are getting the best deal for your particular energy needs. In all states except Tasmania and the Northern Territory, you have a choice of retailers to go with. In Western Australia, you can only choose providers if your energy use is over a certain amount.

There's a range of calculators or estimators to help with finding the best option for your household. These tools allow you to compare electricity and gas contracts available from licensed energy retailers. They can help you estimate your annual energy costs under each contract. You’ll need access to your previous electricity and/or gas consumption information. If you don't have previous bills available—your current energy retailer can provide you with this information.

Keep in mind that the calculators are intended as a guide only. It’s important to consider the recommendations against your particular household circumstances and any exceptions that might apply. Be aware that some of these services receive a commission for transferring customers to an electricity or gas retailer with whom they have an agreement.

Do your research. When comparing offers ensure you:

• Compare costs accurately. Ask retailers what their price is in cents per kilowatt hour (c/KWh).
• Ask what service fees you may have to pay. When you compare, check whether the charge is for the same number of days as on your existing electricity bill.
• Check whether there are any extra fees such as for late payments or early contract termination.
• Ask if anything extra is included in a market offer such as bonuses or savings.
• Check billing and payment arrangements—including how and when you are billed and payment options. Check whether time-of-use pricing or off-peak hot water is on offer.
• Check what happens at the end of the contract period for market contracts. Find out how you renew and what happens if you wish to change retailers or return to a regulated contract.

Retailers should provide an adequate response to any questions or issues you raise. If you feel you have been misled or issues remain unresolved—you can contact the energy and water ombudsman or appropriate tribunal in your state.

Compare offers in your area

• Essential Services Commission of South Australia–Residential Estimator
• Independent Pricing and Regulatory Tribunal of New South Wales–My Energy Offers calculator
• YourChoice Victoria–Search for electricity and gas tariffs in your area
• Queensland Competition Authority–Electricity and Gas Price Comparator
• ActewAGL–ACT Residential electricty prices 2011–12–ACT Residential Customer Price List (electricity)
• Energy Australia–ACT Residential Customer Price List (electricity)
• Government of Western Australia Office of Energy–Can I choose an electricity retailer?

Households in Tasmania and the Northern Territory do not yet have a choice of retailer. For details on current pricing and household energy tips you can go to your existing supplier.

• Aurora Energy (Tasmania)–Efficiency Calculator
• Aurora Energy (Tasmania)–Energy saving hints tips
• Power Water Corporation (Northern Territory)–Residential Pricing

Avoiding the peak: stop your bills climbing

For some households, taking advantage of time-of-use pricing by using energy outside peak times may be a way to reduce costs. Time-of-use pricing means your energy costs are lower or higher, depending on the time of day you use energy. Prices are usually divided between peak (2pm-8pm weekdays), shoulder (7am-2pm and 8pm-10pm on weekends) and off-peak (all other times) with off-peak being the least expensive. Using off-peak hot water and smart (or interval) metering are two ways to make use of time-of-use pricing.

Off-peak hot water

Hot water makes up a quarter of household energy use in the average home so switching an existing storage hot water system to an off-peak tariff can save you money on your energy bill. With an off-peak storage hot water system, your water is only heated during the off-peak time period when energy prices are cheaper.

However, it’s important to be aware that off-peak systems don’t use less energy or produce fewer greenhouse gas emissions just because they’re only heating water during off-peak periods. In fact, many off-peak systems can use more energy overall as they tend to be larger to store hot water for use whenever it’s needed.

When it comes time to replace your hot water system, the best way to reduce energy use as well as your energy costs is to consider switching to solar, heat pump or high efficiency gas. If you’re considering upgrading your hot water system it’s important to choose one that is right for your situation. You should also be aware that electric hot water systems are being phased out from 2010.

If you want to take advantage of off-peak, your existing hot water system must meet your needs and your energy retailer’s requirements. This could include the size and type of hot water system you currently use. Check with your energy retailer to find out any requirements and whether you can access this option.

Smart metering

If you are mainly using your electricity during off-peak and shoulder periods—or are willing to shift your usage to these times—having a ‘smart’ or interval meter installed may be cost effective.

An interval meter measures your power use in 30-minute intervals and allows your distributor to charge different rates rather than one flat rate. The more you shift away from peak power the more you save. For example, by turning your dishwasher on before going to bed rather than after dinner or by using your clothes dryer only on weekends. There are further savings to be made if you have appliances that use a lot of power, such as pool pumps or air conditioning. It can also work well with in-slab electric heating (check your operating manual or with the manufacturer to ensure compatibility with their products).

In considering time-of-use pricing, you need to look at your household habits very carefully. It’s possible that if you switch to off-peak but then find you’re using more electricity during peak times, you’ll end up paying more. For example, if you’re a busy family with young children who all need to be fed, bathed and in bed by a set time each evening, you’ll have no choice but to use energy in the peak evening period. If you’re interested in off-peak hot water or smart metering, contact your energy retailer first to see if it’s possible and to find out what you need to do.

If time-of-use pricing isn’t the right fit for your household, or you're not able to sign up for it, there are plenty of other steps in this guide and on LivingGreener you can take to reduce your electricity bill. As these involve decreasing your energy use overall, they also save on greenhouse gas emissions, benefitting the environment as well as your hip pocket.

Investing in energy-efficient appliances

The price tag doesn’t tell the whole story when weighing up the cost of your new television, refrigerator or washing machine. Many appliances that have a less expensive purchase price may end up costing you far more in energy costs over the lifetime of the product. These running costs can even far outweigh the original lower purchase price.

Appliances can make up to 30 per cent of your total energy bill so this is obviously a key area where you can make significant energy savings. Here are some key pointers:

• Choose appliances and technologies that suit your needs and that use the lowest number of watts or megajoules. Avoid the lure of upgrading to bigger products or those with more features you may never use and which can lock you in to costs for years to come.
• Compare the Energy Rating Label found on appliances including televisions, dishwashers, washing machines, refrigerators, freezers and clothes dryers and go for the product with the highest number of stars.

  For example, a 117cm plasma TV with 2-star label can cost around $219 a year to run compared to $71 for an LCD (LED) TV of the same size with a 7-star label. Choosing the more energy-efficient TV could save you nearly $1,500 over a 10-year period. Energyrating.gov.au has information to help you with your research.

• For those products without energy ratings, you find out how much energy they use and compare this with a product of a similar size or capacity and which manufacturers include energy saving features in their products. You could also check to see if the product has the blue ENERGY STAR mark.
• For appliances and technology you already have at home, you may wish to identify which ones are the biggest energy users by using a simple calculation to estimate the running costs and then consider how you save money by using them more efficiently.
  
• Install your appliance so it runs efficiently and at optimum levels. For example, fridges should not be placed next to ovens or warm spots as they will need to work harder to stay cool. Proper use and maintenance is also important, for example, allowing heated food to cool before placing it in the fridge and repairing seals on your fridge door so cold air doesn’t leak out.
• Use thermostat controls to minimise energy use and still achieve home comfort. Spend some time reading the manual so you know how to turn on these features if they’re not the default setting.
• Operate the appliance for the shortest amount of time possible and turn it off at the wall when you’re not using it. This includes turning off computers, screens and other office and home entertainment products such as printers and speakers. (With the exception of appliances like refrigerators and some medical equipment which needs to stay on all the time.)

Checklist: Start Saving!

5 ways to reduce your energy bill now that won't cost a thing

1. Hot water—potentially the single biggest source of energy use in your home.

   Wash clothes in cold water and only wash full loads. Run the dishwasher only when it’s full and scrape plates first then cold water rinse if they need it. Fit a low-flow showerhead (it will pay for itself in no time) and take shorter showers.

2. Climate control—heating and cooling are usually the next biggest energy guzzlers.

   In winter, set your heating thermostats to 18–20 degrees Celsius. In summer, set your cooling thermostats to 25–27 degrees Celsius. Every extra degree increases your heating and cooling bill by about 10 per cent. Close internal doors and only heat or cool the rooms you are using.

3. Window watch—up to 40 per cent of the heat in your home could be leaking out your windows.

   In winter, open curtains to let the sun in and close curtains before it gets dark to keep the heat in – especially while your heater is on. In summer, close curtains during the hottest part of the day. At night you can open curtains and windows to let warm air out and cool breezes in.

4. Use appliances wisely—they could be responsible for as much as one third of your energy bill.

   Turn off additional fridges and freezers when not needed and think about getting rid of these. Use lids on pots while cooking, fill the kettle and pots with only as much water as you need. Reduce pool filter running time to the safe minimum set out in the manual. Dry clothes on the line not in a dryer—it’s free!

5. Turn it off at the wall—standby power can account for more than 10 per cent to your power bill.

   Any items with a little light on or clock are using power, and your mobile phone charger is drawing power even when your phone is not plugged in. Turn off appliances at the wall when you’re not using them—it’s a very easy way to save energy. Consider smart power boards and take control of your technology.