Your bill explained: the costs to connect electricity
Understanding your power bill can help you make sure you are getting a great deal. While most of us can get to grips with usage charges, you might have also noticed a supply charge on your bill that never seems to go away no matter what you do!
This page will cover:
- Supply charges explained
- Can I switch electricity providers to pay a cheaper charge?
Supply charges explained
There are two charges on your bills – a usage charge and a supply charge. When you look at your bill, you might see a daily supply fee, fixed fee or service charge – these are all different names for the supply charge.
• Usage vs supply charges
The usage charge is the cost per kWh for each unit of electricity you consume. A supply charge is a fixed daily fee that you pay to be connected to the energy network, or ‘grid’.
You will be charged the daily fee regardless of how much energy you use that day. Even if you are away and use no electricity at all, you will still have to pay the fixed fee on your bill.
• What is the supply charge for?
The electricity distributor in your area charges for the expenses involved in maintaining the poles and wires to your home, as well as the cost of meter installation, upgrade and readings and emergency works.
These costs vary in different geographic areas, which is why each distributor charges a different amount.
• Who decides on the price of supply charges?
In deregulated energy regions – Victoria, New South Wales, South-East Queensland, ACT, South Australia and Tasmania – individual electricity companies set their own supply charges.
In other areas, the cost is regualated by state governments and charged by the designated electricity company.
• How much is my supply charge?
The cost of your charge depends on your retailer and your distributor (which is determined by where you live). On average, supply charges in Australia are between 80c and $1.20 per day. Your retailer will add this up over the quarter to give you the charge on your bill.
As a guide, customers with the ‘Big 3’ energy retailers (Origin Energy, EnergyAustralia and AGL) pay these average amounts in each state.
- Victoria – 113.20c/day
- Queensland – 112.16c/day
- South Australia – 95.25c/day
- New South Wales – 90c/day
Don’t despair if you are in one of the expensive states – retailers often compensate for high supply fees with discounted usage rates, so you won’t necessarily be paying the highest bills. For example, electricity providers QLD often have the highest solar feed-in tariffs or discounted rates to offset the relatively high daily fee.
To find out how much you are paying, take a look at your most recent electricity bill. You will see the cost per day as well as the total amount for the billing period.
• How do I pay my supply charge?
While it is the electricity distributor in your area that charges the fee, you will pay your retailer, who will pay the distributor on your behalf. That way you only receive one bill and only have to make one payment each quarter.
Because the supply charge is a fixed fee, the best way to save money on your bill is to reduce the amount you use, which will reduce your usage charges. You can also compare plans from multiple retailers to find the best deal to pay less for your energy usage, such as discounted rates and off-peak tariffs.
• Why do I pay for two supply charges?
If you have an extra supply charge on your bill, this is related to the type of tariff you have.
A controlled load tariff uses a separate meter to track usage for specific, heavy-load appliances such as hot water systems and pool pumps. There will be a separate supply charge for the additional meter, which is much lower than your main daily fee, usually just 3 or 4 cents per day.
Can I switch electricity providers to pay a cheaper charge?
If you live in a deregulated energy market then you can, and should, compare electricity providers regularly to make sure you are getting the best deal. We recommend you compare whenever you are moving home electricity to a new area, or every 12 months in your current residence.
You need to consider all aspects of an energy plan to determine which is the cheapest option for you. You should look for:
- Supply charge per day
- Usage charge per kWh
- Discounted rates
- Off-peak tariffs
- Solar-feed in tariffs
- Special offers
- No lock-in contracts
With so much to consider, it is wise to turn to the professionals. A comparison service like CheapBills will compare plans from a range of preferred providers to find the perfect match for your home’s energy needs.
CheapBills supports fundraising efforts through icause – when you compare and switch electricity, a donation will be made to your nominated crowdfunding campaign.
If you are moving to a new area, call Move-In Connect. As well as comparing rates, a moving utilities service can arrange all the new connections for you in time for moving day.
Conclusion
The supply charge makes up a big portion of your energy bill and is a fixed fee so you cannot influence it in the same way as your usage charges.
When you are moving home electricity you should look for a plan with a low daily supply charge and rates and tariffs to suit your needs. But remember, often retailers offering a low supply charge will have higher usage charges and vice versa, so it’s a good idea to talk to an expert to make sure you choose the right plan, which could save you hundreds of dollars every year.
