Time to renew OEM? Should you stay or switch back to SP Services


 

Start of a new year means relooking into personal finances. 

For those who had locked in good rates during the good old days back in early 2021 for electricity under Open Electricity Market, now will be the time for renewal.

When OEM was introduced, we recommended a few tips on choosing an OEM supplier. It made perfect sense to switch to an OEM supplier back then as the rates were provided at a generous 20% discount. For early adopters back in March 2021, they are still able to renew under similar discount rates. All in all, these early birds had saved plenty on electricity bills for over 4 years. We also saved a couple of thousand over this period.

Today, the OEM suppliers have remove

d these discounts. While the prices are still lower than SP Services, it is negligible. 

Current SP Tariff vs OEM

The current SP Tariff for 1 Jan to 21 March (Inc of GST) stands at 28.95 (31.27c/kWh after GST). Geneco, one of the biggest 3rd party retailer, are offering a fixed rate of 30.8 c/kWh. The Difference is only a mere 1.5%


Moreover, if you opt for a 3rd party supplier, you would need to lock in the rates at 30.80 c/kWh. For SP services, the electricity tariff will be amended every quarter according to the market condition.


Natural Gas and Oil Price

One of the main components of Electricity Tariffs is Natural Gas and Oil. The others are marketing and staff costs. While it is undeniable that the latter may rise, the former has fallen significantly over the past few months.

Here is a comparison of Natual Gas, Oil Prices and tariffs of SP services over the last 2 years

SP Services

SP Services

Natural Gas

Natural Gas


Brent Crude Oil



Should I stay or Should I go?

A year ago (Jan 2022) , Brent Crude oil was at around 90 and Natural Gas was at 4.87. They had since dropped by 11% and 22%, respectively. During that period, SP contract was at 25.44 (before GST). Given that it is currently at 28.95 or about 13% higher than Jan 2022, it should at least fall back to Jan 2022 level.

You may ask yourself if you should continue with OEM. Looking at the current gas and oil prices, it would not be surprising to see electricity tariffs falling over a year. If that is the case, it may make more sense to switch to SP Services and only Switch to OEM once the prices of the Electricity Tariff catch up with the market prices.

Which option will you choose?

How to Switch back to SP Services?

Different OEMs has different practise. It is best to call their customer service for advice.

Disclaimer
This is not financial advice. It is an educational post base on facts and figures for reader's information only.





No comments: