How energy is bought and sold

Understanding your electricity bill

By September 22, 2020November 5th, 2020No Comments
A person paying their bill on a laptop

Having trouble understanding your electricity bill? Here’s what you need to know to demystify the jargon and make sense of what you’re being charged.

They say you get what you pay for, but when you don’t know exactly what you’re paying for, it’s easy to feel like you might be getting shortchanged. The contents of the electricity bill you receive every month or quarter can seem confusing, but when you break it all down, you’ll see your bill is no great mystery – and it might even help you to save money in the future.

What’s on my electricity bill?

The formatting of your bill is likely to change from one retailer to the next, but the information it should contain is standard.

What's Watt Electricity Bill Explainer

Your electricity bill should show you:

  • The billing period (the start and end date of the bill)
  • How much you have to pay
  • How much energy you used
  • Whether you are using more or less energy in this billing period than you have in the past
  • Your meter number
  • Whether the bill is based on an estimate of your meter reading or an actual meter reading
  • Any extra fees or charges you need to pay, like a disconnection fee or late payment fee
  • Any amount credited to your account as part of a rebate or concession
  • How to contact your energy retailer
  • Your customer account or reference number, to quote when contacting your retailer

While there are four main costs that make up the price of your energy, there are only two major charges that should appear on your electricity bill – the supply charge and the usage charge.

What’s a supply charge?

The supply charge is the cost of getting electricity to your home or small business.

The supply charge has nothing to do with how much energy you actually use – in fact, even if you used absolutely no electricity at all in a given billing period, you’d still have to pay a supply charge. That’s because the supply charge is an amount your energy provider charges for keeping your property connected to the network each day.

You might also have seen this charge referred to as a ‘fixed charge’, ‘daily supply charge’, ‘service charge’ or ‘service to property charge’, but they’re all the same thing. It’s the equivalent of the cover charge you might have to pay to enter a club, even if you don’t buy a drink, or the base charge you have to pay for catching a taxi, even if you don’t go anywhere.

The supply charge pays for the infrastructure that keeps your property connected to the network. There are many stops along the electricity supply chain before power gets from a generator to your house or business, including transmission and distribution lines that have to be built, maintained and operated, and each of these links in the chain incurs costs that are ultimately passed onto you in the form of your power bill.

Electricity supply chain

If your property has a ‘controlled load tariff’, you’ll have an extra supply charge on your bill. This is a separate metered charge that guarantees electricity supply to hardwired appliances like hot water systems and pool pumps for a certain amount of time each day. Whether or not you have to pay this charge – usually a relatively small amount in the vicinity of three or four cents per day – will depend on which network you live on.

What’s a usage charge?

The usage charge, sometimes referred to as the consumption charge, is the cost of the electricity that you actually use.

Unlike the supply charge, it’s a variable charge, which means it will be different on each bill you receive, depending on your usage. Your usage charge will appear on your bill in cents per kilowatt hour (c/kWh); on a gas bill, it will appear in cents per megajoule (c/MJ).

It’s possible that your bill will show more than one usage charge, depending on the type of plan that you’re on with your energy provider. If you’re on a ‘time-of-use’ plan, for instance, which means you pay a different usage rate at different times of day, you’ll see usage rates for each of these time periods – usually classified as ‘peak’ (4 pm to 8 pm on weekdays), ‘offpeak’ (10 pm to 7 am) and ‘shoulder’ (all other times).

Because your usage charge is directly dependent on your electricity usage, you have much more control over it than your supply charge – and if you make an effort to be more energy-efficient and use less electricity, you can save money on your bill by actively reducing it.

What’s a demand charge?

If you live in Queensland, there may be a new charge – called a ‘demand charge’ – on your bill. Only available to customers with smart meters, it’s a charge based on how much power you use at a particular time of high demand. Essentially, you pay lower supply and usage charges, but incur a ‘demand charge’ for your energy usage in peak time periods (usually set as a 30-minute period between 4 pm and 8 pm). This only applies to specific, optional plans, so it’s unlikely you would see this charge on your bill without being aware of it in advance.

Why is my electricity bill more expensive than usual?

There are a number of possibilities that might explain why your bill has gone up.

For starters, retailers can change the price of energy. How often they are able to do this will depend on the terms of your plan, but it’s easy enough to tell when this happens – just compare the price per unit of electricity (per kWH) on your current bill to your previous bill. (If it’s a gas bill, look for the price per MJ.)

If you still owe money from your previous bill, that amount might have been carried over to your current bill. This will usually be clearly noted on the bill itself.

If the temperature is heating up and you used the air conditioner more often (or it’s cooling down and you used the heater more often); if you bought a new, power-hungry electric device; if you started working from home recently; or if you had visitors at your place using your electricity throughout the billing period, these things would all contribute to a rising electricity bill.

You could check with your energy provider to see if your electricity plan has a ‘seasonal tariff’, which means you pay a different price for electricity at different times of the year.

Sometimes, if your meter is broken or not easily accessible, your energy retailer will have to make an estimate. They’ll look at your bill from the same period last year and make it about the same as that one, or they’ll guess your energy usage by looking at the usage of a similar customer in the same period.

If this happens, it will be marked on your bill – you should see the words ‘estimated reading’ (or even just the letter ‘E’) next to your usage charge.

If it later turns out you were overcharged, your energy retailer will take that amount off your next bill. (If you were overcharged by more than $50, you can ask them to simply give you back the money instead of taking it off your next bill.)

If, however, it turns out you were undercharged, you’ll have to pay the amount that has been undercharged, but the retailer can only go back a maximum of nine months.

If you’re still not sure why your bill is more expensive than you expected, contact your energy retailer. If you can’t come to an understanding with your retailer, contact your local energy ombudsman.

Of course, no matter how well you understand the charges on your energy bill, you probably won’t enjoy receiving it – but now that you know what to look for, you can ask your energy retailer the right questions, and take an important step towards finding the plan that works best for you.

Want more information? Check out these other helpful resources which explain what’s on your energy bill:

Worried about your energy bills?

The energy sector has come together to help keep Australia’s power going and provide support to people and businesses impacted by COVID-19.

This means that your energy retailer, with the backing of the rest of the industry, can offer you assistance suited to your needs.

Your energy retailer is here to help. The first step is getting in touch, so your retailer will be able to help you get the support you need.

Stanwell is an electricity generator, and only sells wholesale energy to large energy users, like mines and big manufacturing companies. 

The above explainer aims to help households and small businesses understand the electricity bills they receive from their energy retailer. If you’re having trouble understanding your electricity bill, you should contact your electricity retailer directly.