Day 1: Energy challenge

Are you ready for day one of the energy challenge?  Are you ready to save hundreds of dollars on your energy costs this winter, and to save ahead of the summer heatwave?

Welcome to this challenge. This is the first time I have done a ‘challenge’, and I don’t quite have the technology sorted yet but believing in imperfect action I am doing it anyway.  To follow the conversation, join me and the community on the new Frugal Dare to Millionaire group, or subscribe to the email on the homepage (right sidebar). Love and thanks to the community that is ALREADY following. I really worried that no-one would follow this challenge and I would be a bit of a loner, but I am so pleased to see that people are keen to save money and become involved.

Your challenge for today, should you choose to accept it, is to find your electricity and gas bills for this time last year.  If you don’t have for this time last year, maybe ring your energy company.  If you don’t have a bill folder or somewhere where you keep your bills handy, perhaps it is time to start.

I remember how scary it was to get my energy bill last year, even scarier the year before. In my old house I had flatmates and a tenant in the granny flat, and I paid energy costs for the lot.  It is hard to tell people not to use up electricity, especially when they have come from the northern hemisphere and are cold.  And especially when they don’t understand the costs.  I am now in a smaller and well-insulated apartment, but still I will expect it to be high.

When you find that bill,  add 20% to it (this is part of the challenge as per below).  That is because in New South Wales and the ACT prices have gone up by 20% from 1 July. In Canberra this amounts to an extra $579 per year on average.  Probably your entire bill will not have gone up, but most will have.  Prices in other states and territories have also gone up, and prices are going to go up again next year, the year after and probably continue for a while.  The Chief Scientist delivered a review into energy (aka the Finkel review).  The Prime Minister often talks about energy.  Energy, energy, energy – it is front page news and the big political issue that Australia is facing right now.

I could go on and on about energy, but I am not going to as for various reasons I wish to keep my views on the problem and potential solutions private.  All I will say is there is a lot less energy is being produced right now, and even less in the near future. There are challenges in meeting Australia’s obligations to reduce emissions under the Paris Agreement, a trend towards privatiation, ageing power-plants have been decommissioned (including Hazelwood, which had provided up to 25% of Victoria’s energy requirements), bans on gas production in the eastern states (plus large export contracts for Queensland produced gas,  and also lack of clear government policy had discouraged any major new investments (other than in renewables). That means there is less energy in the National Energy Market grid on the east coast.  Which means that based on demand and supply, prices are going up and will continue to do so.

Lower income families are already feeling pressure.  In Queensland (where the warmer weather does not necessitate the same heating demands as in up to minus eight Canberra), 460 households a week are having their power disconnected.  And a recent survey showed that households are becoming increasingly concerned about the cost of rising energy (plus interest rates).  Consider, too, that rising energy costs will impact on refrigeration costs in supermarkets, which will push up the price of key food items as well.

I have long been concerned that it is often the poorest in our communities who will be hit the hardest by large energy prices.  This is because people on low incomes are hit by a double whammy.  Firstly, they can rarely afford to do fancy things like install double glazing or put in solar PV panels or insulate ceilings or walls.  They are probably renting and/or in public housing, and usually these are older style houses that are not energy efficient.  Secondly, they can rarely afford to invest in energy efficient appliances.

Now that I have scared you into taking action, it is time to TAKE action:

1. Find last year’s electricity and/or gas bills;
2. Add 20% to it;
3. ‘Divide it by the number of days; and
4. Have a glance at what your energy usage is to get a sense if your overall usage is increasing or decreasing over time.

That is how much you are paying per day for electricity and/or gas.  Every time you turn on the lights, or turn on the heater, or turn on the oven, that is how much it cost you.  All the little things add up, and over the coming weeks we are going to drill down into that.

While I have moved into a new property with no gas and less heating costs, for the sake of this challenge I am doing the same exercise.  Gas was $845 for the quarter ending in August 2016, and electricity $850 – combined total $1,695.65 or $18.84 per day.  With the price increases, this year it would have added $355.13 – so total cost of $2,050.78 or $22.78 per day.  I don’t spent that much per day on groceries.  Wow.  I had no idea it was so much.  And energy usage trended upwards in 2016 compared with 2015.

I would love to hear about your energy bills and how much you estimate it will cost you per day.  Join the conversation on the new Frugal Dare to Millionaire group.  See you there!