At Canstar, our mission is to help consumers discover the best deals. But sniffing out the cheapest power deals can seem complicated. To start with there are so many different power companies: nine in Canstar's most recent ratings. And they all offer different deals.
Then there is the issue of working out your power needs and deciphering your bill: what's the difference between variable and fixed charges, and electricity authority levies? In all, it can seem too complicated. But it doesn't have to be a big deal to find a great deal.
All you need to do is find your latest power bill and you're away. Here's what you need to know to explore if you can save big on your power bill:
Step 1 to the cheapest power deals
Grab your latest bill. There are only two main charges you need to concentrate on:
- Fixed charges – these are displayed as cents or dollars per day. You are charged this fixed-rate each day, regardless of how much power you use
- Variable charges – the cost of the power you've used, based on consumption in kilowatts per hour (kWh)
Your bill should also include a charge for the Electricity Authority levy. This charge funds the government agency's work to regulate the electricity industry, and is usually based on how much power you use. But don't include it in your calculations, as it's not relevant to an individual electricity provider's power deals.
Step 2 to the cheapest power deals
Once you can see how much you are paying in fixed and variable charges, it's an easy step to jump online and get comparing different power companies and the deals they're offering.
A good place to start is Canstar's most recent review of electricity providers, as it lists all the big players in the market. Most retailers have websites that allow you to compare their plans according to your address.
All you need to do is some simple arithmetic, to compare the total cost of your variable and fixed-rate charges on your bill with your current provider against what's on offer from a competitor. For example:
Current power deal (standard user)
Variable | 452kWh x 19.27c | $87.10 |
Fixed | 30 Days x 235.05c | +$70.52 |
+GST 15% | +$23.64 | |
-12% Prompt payment | -$21.75 | |
Total = $159.51 |
Competitor's power deal (standard user)
Variable | 452kWh x 18.53c | $83.76 |
Fixed | 30 Days x 200c | +$60 |
+GST 15% | +$21.56 | |
No additional | $0 | |
Total = $165.32 |
The above figures are based on some actual figures from two power companies and a real power bill (mine from March 2022). And they provide a good example of why it's worth looking past just daily fixed prices and charges per kWh.
At first glance the competitor's pricing looks favourable:
- 18.53c per kWh vs. 19.27c per kWh
- 200c per day vs. 235.05c per day
But after you factor in the discounts on offer from my current provider (12%), it comes out ahead.
Other things to consider
Standard-user tariff vs Low-user tariff
The low-user tariff is being phased out. This means if you're one of the 68% of Kiwi households on the low-user tariff, you're going to see your daily charges increase.
Over the next five years, the daily charge will increase by 30c each year. From 30c, the daily low-tariff charge has already been raised to a max standard charge of 60c. And by 2027, it will rise to 180c, in line with the standard-user tariff.
To offset this increase, the cost per kWh should come down for low-tariff users. But how this discount is passed on to consumers is up to individual power companies. This means over the coming years, it will pay to be extra vigilant about the price you're paying for your electricity.
Off-peak usage
Cheaper off-peak electricity isn't available everywhere, or offered by all retailers. Typically offered overnight and at weekends, it can save you money if you can adapt your home's energy usage to fit in around the off-peak times.
Free power period
Some retailers offer free power periods, usually off-peak. If you can coordinate your high-power usage around such a deal, you can make considerable savings. Think: running washing machines, dishwashers and heat pumps, or taking baths and showers.
Fixed contracts
By signing up to 12- or 24-month contracts you can usually secure a cheaper price. Although be aware that break fees will apply if you need to end your power contract early.
Bundle deals
You can often save heaps on your power if you bundle it with either gas or broadband.
Special offers
If you’re switching power companies, it always pays to factor in any special offers attached to the deal you’re being offered. While whiteware, electrical goods, reward points or offers of cash might seem appealing, there can often be a catch. As the old saying goes, there's no such thing as a free lunch. So check the cash value of any reward against the long-term cost of the power plan it's tied to.
