Your electricity bill is provided to you by your energy retailer. In this article, we unpack the different parts of a typical Australian electricity bill and what factors affect how much you pay for power.
What are the different parts of my electricity bill?
Understanding the different parts of your electricity bill and what they mean can help you spot when anything changes. If your bill unexpectedly increases, the first place to look for clues is your electricity bill.
Here are the different parts of a typical Australian electricity bill and what they mean for you.
1. Types of charges
Fixed charges are paid for each day or each billing period and are sometimes called supply charges or service charges. These include charges for grid connection, metering, administration and billing costs.
Variable charges depend on how much electricity you use and, in many cases, when you use it. They include usage charges and demand charges.
2. Your average daily kWh usage
Misleadingly, kilowatt hour (kWh) doesn’t refer to the amount of kilowatts you’re using per hour, but is rather a unit of measurement used to determine how much electricity you use. For example, a 50 watt alarm clock would take 20 hours to use 1 kWh. Whereas a 2,000 watt dishwasher would use 1 kWh in just 30 minutes.
3. Billing period
Typically either 30 days (monthly) or 90 days (quarterly), the billing period is the timespan in which you used the electricity you’re being billed for.
4. Account information
Every electricity bill will have your name, address and the date of the bill listed, usually at the top of the first page. You’ll also be able to see your NMI, or National Meter Identifier, which is a unique number that identifies your property's electricity meter. The NMI makes sure you get billed for the right usage as it’s tied to your supply address.
Meter readings
Energy retailers use your meter to calculate how much you need to be charged for your electricity usage. You might have an old analogue meter, in which case you’ll have a meter reader come around every so often to read it manually and give the information to your retailer. Increasingly, it’s likely you will have a smart meter, which is the new digital meter.
A smart meter sends information automatically to your retailer, so there’s no need for meter readings or estimated bills. Note that if your reading is an estimate, it should clearly say this on the bill.
Payment details
What you need to pay, how to pay it, the due date and any credits applied to your account will be stated on your electricity bill.
Solar customers
When you generate more electricity than you use, the remainder gets exported back to the grid. If your property or business has solar panels and/or batteries installed, you’ll also see information on your bill related to payments or credits for power you sent back to the grid. This information will form your solar feed-in tariff (see below for a definition of a tariff), the rate in cents per kWh that you’ll be paid for the solar energy you generate.
What affects my electricity bill?
Aside from your electricity usage (and the amount of solar energy you generate if you have solar), there are a number of other factors outside of your control that impact the final cost listed on your bill. From wholesale costs to tariffs, fluctuating costs have seen prices rise dramatically in recent years, putting a strain on the budgets of households and small businesses around the country.
Rising wholesale costs
The wholesale cost of electricity is how much big power plants are paid for generating electricity. The price of coal and gas has increased dramatically in the last few years. Much of our electricity is still generated by these fossil fuels and the flow on effect from this affects what retailers charge consumers.
Changing network costs
Up to 50% of an electricity bill can come from network charges. These are the costs for the poles, wires and other infrastructure needed to get the electricity from where it is generated to your property. How this infrastructure is managed affects your electricity bill and we think there’s a lot of potential for industry to drive costs down by being more efficient.
Prices that network businesses charge are directly regulated by the government (via the AER), but they are also linked to interest rates. When interest rates rise, your network costs – and power bill – likely will too.
Retailers
According to the ACCC, 80% of consumers could be on a cheaper energy plan (energy retailers do not have to automatically put you on the best deal). To find out if you’re on the best deal and how you can get a better deal, read this article.
Type of tariff
A tariff is how you’re charged for the energy you use. There are many different types of tariffs that are structured in a variety of ways. Some are more complex than others, charging you more or less based on the time when you use energy.
Explore the table below to see what common tariffs you might see listed on your electricity bill.
Type of Tariff | Description |
|---|---|
Flat rate or single rate | Listed on your bill in c/kWh, this tariff means you pay the same amount for what you use, whatever time of day you use it. This is not necessarily cheaper, but it does make it easier for you to know how much money you will likely pay every month. |
Block | More common for business customers, this tariff is similar to a single rate but there will be a different price depending on how much you use. For example, one price is applied for the first 20 kWh used, then a different (often cheaper) price for anything above 20kWh. |
Time-of-use | Time-of-use rates charge you different prices depending on the time of day that you use the electricity. This reflects that the cost to supply you with energy varies throughout the day. Energy is most expensive during ‘peak’ periods, the cheapest during ‘off-peak’, while ‘shoulder’ rates are between the two. |
Controlled load | This typically applies only to certain appliances connected to a separate meter, such as water heaters or pool pumps. A third party controls when your water heater or pool pump operates, typically charging you less as a result. |
Demand charge | Demand charges are determined by how the highest amount of electricity you use during a given timeframe. This is often calculated based on your highest one hour of consumption in a month. They are designed to encourage less usage during peak times, and can be added on top of flat or time of use tariffs. |
In a recent report, we found that many consumers on time-of-use or demand tariffs are changing when they use their appliances, but very few are changing when they heat or cool their homes or use hot water (these are the appliances that account for most of your household’s energy use). This means many consumers aren’t getting the best ‘bang for buck’ from a time-of-use or demand tariff because they’re only shifting when they use appliances that don’t use much energy, like dishwashers.
Your energy use
How much electricity you use forms part of the overall picture of your electricity bill. Heating and cooling are the biggest culprits when it comes to energy usage, so if you’re looking to make changes at home, they’re a great place to start.
Small businesses may want to get an energy audit to understand what will provide the best bang for buck.
What energy tariff/s are on your electricity bill?
A simple step you can take towards getting a handle of your electricity bill is taking the time to understand what tariff/s you’re on. This can help you determine if the plan you’re on is the right one for your home, office or building.
If you’re unsure or have questions, call the customer service number for your retailer listed on your bill.
Check out our articles to see if you're on the best energy plan for you.
Am I on the best energy plan for my home? Am I on the best energy plan for my small business?
