Have you heard of bill smoothing in energy? “According to 2024 data from the Australian Energy Regulator, 2.8% of Australian energy customers are in debt, with 1.7% of electricity and 1.2% of gas customers on hardship programs.” – Canstar Blue.

What is bill smoothing?

Bill smoothing was designed to alleviate the burden of high electricity bills by spreading payments into smaller, more frequent amounts. This method allows consumers to manage their expenses more effectively, creating a predictable payment schedule that fits their financial planning.

How Bill Smoothing Works

Bill smoothing calculates your average annual electricity usage and divides the total cost into consistent, manageable payments. For instance, if your electricity bill for the previous year totalled $1,200, bill smoothing would set your monthly payment at approximately $100. This approach transforms large, daunting bills into smaller, predictable amounts that are easier to handle. You have the flexibility to choose a payment frequency that suits your needs—monthly, fortnightly, or weekly.

Pros and cons of bill smoothing

Bill smoothing is an excellent option for those who struggle to pay large sums at once, offering more predictable billing throughout the year regardless of the season. This method spreads out your electricity payments into smaller, regular amounts, making it easier to manage your finances. However, it’s important to ensure you always have the required amount in your account each month to avoid failed payments, as the scheduled payments will be deducted automatically.

Not all utility providers offer bill smoothing, so it’s essential to verify this option with your specific provider. If bill smoothing isn’t available, or if you prefer an alternative, consider setting aside the same amount in a savings account each month. This approach not only prepares you for your electricity bills but also allows you to earn interest on your savings, providing a financial benefit beyond just bill management.

Additionally, it’s crucial to be aware that if your energy usage exceeds the estimated amount, you might face a large ‘settlement’ bill at the end of the year to cover the additional costs. This potential drawback means that while bill smoothing can make payments more manageable, it requires careful monitoring of your energy consumption to avoid unexpected expenses.

In summary, bill smoothing can relieve those needing predictable and manageable payment plans. However, it’s important to stay informed about your provider’s options, maintain sufficient funds in your account, and consider the potential benefits of an interest-earning savings strategy. By doing so, you can effectively manage your electricity expenses and avoid any surprises.

Consider switching to solar

But if you’re struggling with your bills, a great option is to switch to solar, which will significantly reduce your energy bill so that you’re paying less while still using the same amount of electricity each month.

Your Solar & Electrical Experts

Established in 2020, Tropical Solar and Electrical Services is a locally owned and operated company servicing homes and businesses throughout Mackay and surrounding areas including Moranbah, Sarina, Proserpine and Rockhampton. Whether it’s power on the roof or within the property, we’ll ensure it’s running as it should. Get in touch with our electrical experts today for a free quote. We’re available 24/7 for your convenience.