Understanding Power Costs

Understanding what the elements are that make up the cost of electricity can be difficult and the different ways that pricing is offered in the retail market, with pay on time and big discounts make it even harder!

It is common for people to not be aware that the cents per kilowatt hour price that they are paying for isn’t just for the electricity you use. There are a lot of different things that go into making up an electricity price because there are lots of different businesses involved in getting the electricity into your home; from the Generators who make it, the Distributors who use the poles and wires to send it to you and the Retailers who sell it to you.

Along the way, everyone involved takes a little bit for themselves.

So, generally electricity bills consist of the following price components:

  • cost of electricity;
  • network charges (the cost to transmit and distribute of electricity, from generators to wires to end-users);
  • a retail margin (the on-sell cost from retailer to customer);
  • government and market charges (e.g. AEMO charges)
  • the costs of environmental schemes and other add-ons (National - LRET, SRES, State - VEET, ESS, GEC)

Network Charges

The actual commodity cost of electricity is just one element of your electricity bill. Most of your bill is made up of other various charges from stakeholders in the supply chain. The overall cost of your electricity can be greatly affected by these charges. For example, while the commodity cost remains relatively competitive, maintenance on network infrastructure has seen bills dramatically increase as these charges are passed on from the retailer to the consumer. The daily charge is a fee for accessing and maintaining an energy distributors network. The c/kWh rate also includes the other network charges. These fees are regulated by the Australian Energy Regulator and vary depending on where you live. This is why you can find pricing fluctuations if you move into a different distribution area.

Usage Fluctuations

Energy-On understands that electricity usage can fluctuate throughout the year and we want you to be aware of things that can vary your electricity usage.
There are seasonal factors, such as colder or warmer weather, which can result in fluctuations in your usage. Standby energy consumption from household appliances which consume electricity even when they are not operational can also contribute to unexpected usage, even when you are not home.

Energy-On knows electricity, and wants to help you understand your usage, so if there are any further queries please contact us.