What is bill smoothing?



Based on recent statistics from the Australian Energy Regulator, a small but notable portion of Australian energy consumers, around 2.8%, are currently facing debt, with 1.7% dealing with electricity bills and 1.2% with gas bills, seeking assistance through hardship programs.

As the cost of living continues to rise, having increased by 4.0 – 6.9% in 2023, many Australians are seeking ways to manage their finances more effectively. This article explores the concept of 'bill smoothing' and how it can alleviate the burden of large annual energy bills.

Bill smoothing explained

Bill smoothing is a method that helps people manage their utility bills. Instead of paying a large sum once a year, bill smoothing allows customers to pay smaller amounts more frequently. This approach gives customers more control over their energy costs by spreading out the estimated power costs throughout the year with regular instalments.

Energy retailers can calculate these instalments based on a customer's previous energy usage or by estimating usage similar to households of a similar size.

For instance, if a customer's previous annual bill was $1,200, the energy provider might suggest paying $100 each month for the upcoming year.

Almost all customers are eligible for bill smoothing, but energy retailers often recommend it to those who struggle to pay their bills on time. Customers can usually start bill smoothing from the beginning of their contract or join a program later on.

Who does it help?

As bill smoothing offers a predictable way to manage energy costs, everyone can benefit from it.

Smoothing out the impact of seasonal changes in power usage, like increased heating in winter or air conditioning in summer is important - especially during a cost of living crisis. This predictability can help households budget more effectively, knowing exactly what to expect in their electricity bills from one billing period to the next.

It can also reduce the stress of facing unexpectedly large bills. No matter your income, facing a hike in bills is never easy to manage. With bill smoothing, it can become much more manageable.

What are the downsides?

Bill smoothing, while helpful in spreading out energy costs over the year, can lead to higher payments during certain periods. Conversely, it also means lower bills during traditionally high-usage times.

However, if your energy usage differs significantly from the estimate, you might face a large bill adjustment or receive a credit on your next bill. Energy retailers often send regular review emails to ensure your usage aligns with the predictions.

At the end of the 12-month period, you can expect an annual review notice to discuss your bill smoothing plan for the next year. Keep in mind that different retailers handle bill credits differently.

Bill smoothing and our retailers

At Compare Energy, we are proud to work with a range of Australian energy providers. To understand more about bill smoothing and our retailers, take a look below:

AGL

AGL offers bill smoothing across all its energy products, allowing customers to choose from weekly, fortnightly, or monthly payment frequencies. To qualify, customers must not have more than $500 (including GST) in overdue debt on any AGL accounts and must not be enrolled in any of AGL’s hardship programs.

AGL encourages customers to use direct debit for payments, though other approved methods are accepted. The company also provides 'payment holidays,' allowing customers to take breaks from bill payments. Any missed payments are spread out over the remaining term of the 12-month period. Customers can take a one-month payment holiday or four weekly breaks over the year.

For customers facing financial difficulties, AGL offers the 'Staying Connected' hardship program. This program provides personalised assistance beyond standard payment plans, helping customers address their issues and manage their bills more effectively. AGL may ask customers to pay what they can afford and work with them to improve energy efficiency.

Participation in the 'Staying Connected' program is crucial for customers struggling with payments, as failure to comply could result in disconnection of energy services as a last resort.

ActewAGL

EvenPay is ActewAGL’s convenient payment plan that offers you a set-and-forget approach to managing your energy bills.

With EvenPay, you make regular fortnightly or monthly payments towards your energy bills, avoiding the need for a large lump sum payment. You have full control and can opt out at any time.

This payment plan provides more manageable and predictable bills, ensuring no surprises. ActewAGL calculates your payment amounts by dividing your annual total electricity or gas cost into averaged, even payments. This way, you always know how much and when to pay.

ActewAGL also reviews your usage every six months and adjusts your payments accordingly based on your actual usage. If you're new to ActewAGL and don't have any usage history yet, it will estimate your usage and adjust your payments after the first six months.

You'll be notified in writing if there are any changes to your payment amounts, ensuring transparency and peace of mind.

ENGIE

ENGIE offers tailored payment plan options that are suited to an individual's situation. This provides peace of mind and helps avoid larger future bills or increasing debt.

ENGIE payment plans include:

  • Short-term plans – quick assistance for a short period, from one billing cycle to the next.
  • Longer-term plans – spread costs out over the year and pay in scheduled instalments.

ENGIE customers can choose to pay in a range of ways:

  • Fixed instalments – set amounts paid weekly, fortnightly, or monthly to help stay on top of bills. To apply for a fixed instalment payment plan, go to MyENGIE and select 'Payment Plans' under the Billing tab.
  • Pay in advance – get ahead of bills by paying upfront to cover future bills.

Customers can request a payment plan from ENGIE to ensure that they keep on top of their bills. Requesting a payment plan in MyENGIE involves a few simple steps:

  • Log in to MyENGIE and click on the 'Billing' tab in the header at the top of the page.
  • Click on 'Payment plan' from the list of options.
  • If you are interested in applying, click 'Apply now.'
  • Read carefully about what a payment plan is and how it works.
  • Specify the start date of the plan, frequency, and length of time.
  • Review the details of the payment schedule and finalise.

Lumo Energy

Imagine no more bill shock. Lumo Energy offers EvenPay, which gives customers flexible payment options and better control over their bills.

With EvenPay, customers can make equal payments based on an estimate of their 12-month future energy use. This convenient payment plan eliminates surprises and hidden fees, enabling people to pay with interest-free instalments.

Customers can schedule payments to suit their preference, whether it's weekly, fortnightly, or monthly. Plus, with Direct Debit, you can set and forget, as your payments will be reviewed every six months.

Momentum Energy

Momentum Energy offers residential customers the chance to bill smooth. If you qualify as a residential customer, you have the option to even out your energy payments throughout the year with SmoothPay.

SmoothPay calculates your estimated future energy usage and spreads out the costs evenly over time, smoothing out the highs and lows of seasonal usage. This way, you'll always know the amount you're expected to pay, providing predictability rather than waiting for your bill to arrive.

You can select your preferred payment frequency, whether it's weekly, fortnightly, or monthly, to align with your budget. Momentum Energy will monitor your usage to ensure your payments accurately reflect your energy consumption and make adjustments if necessary.

To set up SmoothPay, simply access your MyAccount and click on the 'Payment options' button, or find more information here.

Red Energy

Red Energy offers a bill smoothing payment plan through its 'EvenPay' program, designed to provide stability with flexible payment options. This program allows customers to make consistent, interest-free payments by estimating annual energy usage. Customers can choose to make payments weekly, fortnightly, or monthly, but all payments must be made by direct debit.

Every six months, Red Energy reviews each customer's account to ensure the estimated energy usage and costs are accurate. Adjustments can be made if necessary. Customers interested in bill smoothing should reach out to Red Energy to check their eligibility for the program.

For customers experiencing financial hardship, Red Energy encourages prompt communication to explore available options. The company is committed to working with customers to create realistic and sustainable payment plans. Additionally, Red Energy provides energy efficiency advice to help customers better manage their energy consumption.

Connect with Compare Energy

To learn more about which energy providers help you to go easy on your energy bills, give the team at Compare Energy a call on 1300 790 106.