You may have seen a lot of power companies around your area offering you to switch electricity providers or get better deals. This article will give a breakdown of everything there is to know about your electricity bills. Depending on your monthly consumption, choose the best energy plan for your home.
The main charges on any electricity bill can be energy charge, supply charge, or network usage charge.
Energy Charge is what you will be paying for the electricity you use. The supply charge is the cost paid from the retailer to their suppliers for each unit of energy they purchase.
Decoding an Electricity Bill
The electricity charges will vary depending on the retailer you go with, but here is an example to understand it better:
Suppose an electricity bill has a total cost of $500.24 ($283.15 for energy and $217.09 in supply charges) with a supply cost of 19.39 cents per kWh. On this bill, you can see the retailer’s name in the ‘Suppliers Details’ section.
The same bill also shows which usage band you fall into depending on your electricity use in each period: Peak (7 am – 11 pm), Shoulder (11 pm – 7 am), and Off-peak (Midnight – 7 am). Electricity usage during peak times is charged at a higher rate than off-peak periods because it costs more for power stations to produce the energy required for these times.
For pricing information and the best energy plan for your needs, contact your current electricity provider or another retailer to find out exactly how much you will be paying through them. But generally speaking, the more energy you use during peak times, the more it will cost.
Average Electricity Usage per Household
The average Australian household uses approximately 19 kWh of electricity every day.
To help you understand your usage, the bill tells you how much you’re using each day and what your daily usage cost is on average. Some companies may have slightly different ways of explaining this information, but it’s fairly easy to find out an estimate of your monthly usage by looking at your last couple of bills. To determine if this calculation is accurate, ensure that all energy-saving devices are turned off when checking your daily usage over a couple of bills.
Calculating Your Energy Usage
Your energy usage can be estimated using the following equation: Energy in kWh = Number of hours used x average daily use per hour.
For example, if you have used 150 kWh over two months, your calculation would be as follows: Energy in kWh = (150 electricity units / 2 months) x (24 hours/day) = 3600 Wh/day average energy usage per day. This means that, on average, you use around 3kWh every hour to power your appliances and devices for an entire day.
To use the standard Australian average of 19kWh per day, you multiply by 24 hours to get 456 kWh. Your last bill is a more accurate reflection of your current electricity usage and demand from your power provider.
Energy Usage Charge
The energy charge on a typical household electricity bill comprises network charges and service charges.
Network charges cover the costs for networks transporting electricity from generators to your home, including poles, wires, substations, and transformers. This cost has been separated from the retailer service charge so that they can be billed separately.
The amount charged for each kilowatt-hour (kWh) used in this component will vary depending on where you live in Australia, as different costs are applied to different networks in each state.
Some states, like South Australia and Queensland, have reduced their network charges by between 10-20% in the past couple of years because of government schemes to reduce these costs for consumers. This charge will account for around half your entire energy cost, so it’s important to know how much you’re paying in this area. The typical cost per kWh ranges from 7-25 cents, depending on where you live in Australia.
The second part is the retailer service charge which covers the costs associated with billing, meter readings, and responding to customer complaints.
While many costs contribute to this amount, most retailers base these fees on market rates instead of actual costs. Some retailers offer incentives to customers who reduce their site usage, which can drive your service charge down.
Most electricity providers have energy plans that work by charging a flat daily fee for using a set amount of energy per day across the week, with a slightly higher price per kilowatt-hour on weekends. To find out the best energy plan for you, contact your current provider or shop around at different companies.