What are electricity pay on time discounts?

Energy bill discounts used to play a big role in reducing your energy costs, but these are not as prominent these days.

Following regulatory changes in the energy market on 1 July 2019, pay on time discounts became less generous and more challenging to locate. While this made discount savings more visible to many customers, it doesn't mean that conditional discounts are no longer offered.

Not all energy plan discounts are created equal, and it won’t always guarantee a favourable deal. How can you ensure you're getting the most out of pay on time discount electricity?

What is pay on time discount electricity?

Pay on time energy discounts are small savings on your energy bill for paying on time. These discounts were changed in 2019 to be smaller and more transparent.

These can vary but are typically around 5%, though these discounts once used to be as high as 47% in Australia. If you pay late, you won't get the discount, but you can still get it on your next bill if you pay that one on time.

These discounts vary between providers and plans, and many are only valid for a limited time before reverting to the non-discounted price.

How do electricity pay on time discounts work?

Pay on time discounts are applied when you pay your full power bill by the due date, giving you a percentage off the total amount.

The discount amount varies among electricity providers and plans, and these discounts can often be combined with other offers, like direct debit discounts, for additional savings.

What other discounts might energy providers offer?

Besides pay on time discounts, there are various other discount types available, but these vary so always check with your provider in case it doesn’t offer what you’re expecting. Some of the other discounts that are available could include:

Automatic payments

Similar to pay on time discounts, setting up automatic payments for your energy bill could earn you a discount. This option offers the convenience of not having to remember to pay your bill on time while also providing a discount on what you pay.

Bundle discounts

Choosing an energy provider for multiple services, such as electricity and gas, could result in a discount as a gesture of appreciation.

Paperless billing

Opting for digital billing instead of paper bills can save both trees and money. Simply tell your energy provider that you prefer to receive your bills digitally through email or its app, and that’ll be something easy to set up.

Loyalty rewards

Remaining with the same energy provider and energy plan for a certain period might qualify you for a loyalty discount, so check with your provider to see if your loyalty helps you to get money off.

Membership discounts

If your energy provider has partnerships with other industries, such as insurance, it may offer you a discount for being a member of its partner organisation.

Referral bonuses

Inviting a friend or family member to sign up with your energy provider could earn you a one-time discount as a token of gratitude.

Online sign-up

Some energy providers offer discounts to customers who sign up for a plan online rather than in person or over the phone.

What about renewable energy plan discounts?

Renewable Energy Plans may include the discounts mentioned above, or your energy provider might offer a unique discount for renewable energy.

However, what often receives more attention with these plans are feed-in tariffs. These tariffs represent the rate at which you'll be compensated for surplus electricity that your solar system exports to the grid. Unlike discounts, feed-in tariffs are more akin to credits.

Using pay on time discounts to save money

In the past, energy providers have faced criticism for offering plans with seemingly large discounts, only to reveal that these discounts were applied to already high base prices. This meant that the actual savings were not as significant as advertised.

Today, the largest discounts generally translate to the biggest savings. Retailers must now compare its overall price estimate to the Default Market Offer or the Victorian Default Offer as a percentage less than, equal to, or more than these default tariffs if it promotes any discount.

Due to recent scrutiny regarding large discounts, many energy retailers have introduced products with no discounts, focusing instead on offering "just low rates" as a selling point.

If you decide to sign up to a plan with pay on time discounts, it helps to know what you are getting from it. Consider the following:

Understand the conditions

All discounts come with conditions attached to them; otherwise, why would a company offer you money off your bill unless it could get something in return?

Energy discounts differ from the discounts you might see at grocery stores like Woolies or Coles. While a supermarket discount on your favourite treat is typically unconditional, many energy discounts come with conditions. This means you need to fulfil certain requirements to receive the discount; otherwise, you'll pay full price.

For example, a direct debit discount is usually ongoing but requires you to pay your bills via direct debit. If there's not enough money in your account when the bill is processed, you'll miss out on the discount.

It's important to recognise that if you struggle to pay bills on time or maintain sufficient funds in your account, these discounts may not be beneficial. Reflecting on your past bill-paying habits can help you choose the right conditional discounts for you.

Research how to compare discounts

Comparing energy discounts is like working with fractions; you need to find a common denominator. Look at your bills over a month, quarter, or year to compare discounts effectively. Be aware of how different retailers apply its discounts; some cover the total bill, while others apply only to certain charges like usage.

The biggest discount may not always be the best deal for you, so consider a lower-priced plan without discounts, as it could be more cost-effective in the long run.

If you're in a region where the Electricity Retail Code applies, retailers must compare its unconditional prices to the Default Market Offer (DMO) and state the conditional price as a percentage of the DMO. This helps you compare plans more easily, even with discounts.

Don’t forget about benefit periods

Discounts on energy plans don't last forever; it comes with a set "benefit period," which can range from months to years.

Once this period ends, so does your discount. You have two options: enjoy the discount while it lasts and be prepared for potentially higher bills afterward or make the most of the discount and switch to another plan when it ends - that’s where you can talk to us.

It's essential to check if your discount has a benefit period or if it's ongoing. This information can usually be found in the plan's terms and conditions or by contacting your provider directly. From there, you can talk to us about the best provider to switch to.

Are there other perks and incentives?

Energy retailers offer more than just discounts; it may also include perks like discounted movie tickets, streaming service subscriptions, or gym memberships. While these extras don't directly impact your energy bill, it can save you money if you already pay for them.

For example, if you go to the movies regularly, calculate how much you spend on tickets and snacks annually. Then, consider the savings if you received free movie tickets. This could add up to significant savings over time, which could be redirected to your energy budget.

Are you eligible for rebates and concessions?

Your energy bill could shrink in more ways than one. Beyond your retailer's discount, government rebates or concessions might be up for grabs depending on your circumstances and location.

These could be ongoing credits, such as the Family Energy Rebate. While you can't compare these benefits like discounts, it can still significantly reduce your bill if you qualify.

What’s the catch?

While pay on time discounts may seem appealing, it can have drawbacks. The larger the discount, the higher the additional cost if you miss the payment deadline.

For example, a 20% discount could lead to a much higher bill if you miss the due date. Some energy companies have been criticised for using these discounts to mask inflated prices, making the discount more of a penalty.

As consumers have become aware of this issue, energy companies are shifting its focus to promoting "low rates" instead of conditional discounts.

To ensure you're not caught off guard, it's important to understand whether a pay on time discount applies to your entire energy bill or just the usage. Additional costs, such as network charges and connection fees, can make a discount on usage alone less appealing compared to a discount that applies to the entire bill.

Is pay on time discount electricity right for you?

Regulatory changes have ensured that pay on time discounts are now likely genuine savings, not applied to inflated prices.

However, the decision to seek out such a discount depends on your ability to pay bills promptly to benefit regularly. Consider opting for a bill with a small discount or none if you're unsure. These discounts are often introductory and end with a new rate that might not compare well.

If you're unlikely to shop around for a better rate after the discount ends, choose a consistent low rate from the start. Compare Energy plans on our comparison page to find the best deal for you.