What Are Pay On Time Energy Discounts?
In the past, pay on time energy discounts made a significant difference to your energy bill. We hear less about them these days but why is that? Are they still around? Should you be taking advantage of this saving opportunity? Let us help explain.
What are pay on time energy discounts?
A pay on time discount is a small saving on your energy bill awarded to you for paying your bill punctually. Changes were made to these discounts when new regulatory standards were introduced in 2019, making them both smaller and more transparently communicated. The discount amount varies between providers but tends to be approximately 5%. In the past, these discounts were as high as 47% in Australia.
So, what’s the catch?
These pay on time discounts are not as attractive as they might sound. The greater a pay on time discount is, the greater the additional cost on your bill if you accidentally miss your payment day. If you have a large pay on time discount of, say, 20% then missing the deadline will leave you with a significantly steeper energy bill than you were expecting. In fact, energy companies have been criticised in the past for applying these ‘discounts’ to inflated energy prices so that the ‘deal’ is less so a discount and instead more of a penalty.
As the market has woken up to this sleight of hand, energy companies have begun changing their tune and marketing their deals based on general ‘low rates’ rather than conditional discounts.
In order to not fall for another catch, it’s worth investigating whether a pay on time discount saves money on your entire energy bill or just usage. Added costs for things like network charges and connection can represent a significant part of an energy bill, which means that a discount on usage only may not be as compelling as a different discount that applies to the entire bill.
Is a pay on time discount the right thing for me?
Regulatory changes have helped ensure that companies are no longer offering discounts on illegitimately high ‘full prices’ so any pay on time discount you see these days is likely to be a genuine saving. But does that mean you should seek out a discount like this on your energy bill?
The main consideration is whether you trust yourself to pay your bill promptly so that you’re able to regularly benefit from the discount. If not, it might be a better idea to opt for a bill with only a small pay on time discount or none at all.
Keep in mind that these discounts are often only available for an introductory period which means, when the period ends, you will be faced with a new rate that might not compare to others on the market. If you know you will put off the chore of shopping around for a better energy rate once the discount period ends, perhaps it’s best to simply choose a consistent low rate from the outset.
Compare energy plans on offer at our comparison page today, whether you’re interested in benefiting from a pay on time discount or just looking for a better deal on your energy costs.