MyTown Energy
MenuWhat do our electricity bills pay for?
The make up of electricity bills varies around the country, and according to what type of customer you are.
As a general approximation, a 30c/kWh electricity rate and $275/year fixed charges could be made up from:
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13c/kWh for network charges (~35%)
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9c/kWh for wholesale energy (~23%)
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3c/kWh for environmental charges (~10%)
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1.5c/kWh and $180 per customer for retailing and billing (~18%)
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$70 per customer for metering (~5%)
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10% GST
Electricity pricing is increasingly varying by time of day, also known as "Time of Use pricing". Different times are known as peak, off-peak, shoulder, and sometimes solar sponge etc. Pricing can also vary by season because the peak load (which drives network costs) occurs more and more on the hottest summer evenings.
A good way to understand the basic breakdown is to visit the regulator's page where the Default Market Offer for households is determined each year. In Victoria this also covers small business pricing. The Default Market Offer is the maximum price that can be charged, so many households will be on more competitive electricity tariffs and could be paying 20% less if they are a savvy shopper.
There are three types of electricity companies that need to be recover their costs from your electricity bill:
- Electricity generators that produce electricity. The large generators sell all their electricity through the wholesale electricity market.
- Electricity networks that transport the electricity from generators to customers and across state boundaries.
- Electricity retailers that buy the electricity, arrange your electricity bill and make sure the generators, networks and other charges are paid. Some of the large retailers own their own generators and are nicknamed 'gentailers'.