Feeling flummoxed by the technical details on your electricity bills? They might not be pathbreaking literature, but your bills are still worth reading if you want to cut costs and carbon. Each retail offer uses slightly different tariffs and charges, and there are several that go into any bill.
The daily supply charge (or service to property charge) is a fixed fee that everyone must pay for the privilege of being connected to the grid. These charges go towards maintaining the poles and wires that service our network. While these fees differ somewhat by location and retailer, they are passed on to customers from the network providers (not the retailers) so can’t be avoided.
It’s common for these charges to be around $1.03 per day in Victoria. If you are paying less than that, you are doing well; much more than that, and it’s worth looking into whether you would be better off on an alternative offer (see above).
Your bill also includes usage charges, or tariffs. There are a number of different kinds of tariffs, but behind the “kilowatt-hours” and “shoulder windows”, they are actually not too complicated.
A single rate tariff is often called something like “general usage” or “anytime”, and charges you the same amount for each kilowatt-hour (kWh) of energy you use, no matter when or how much you may have already used. It’s simple to understand and low-risk, since you know the price of your power at any one moment, and it doesn’t change.
Time-of-use tariffs charge you at different rates in set windows of time, which are based on general electricity demand and prices across the grid. For example, a retailer may hope that by offering a particularly cheap off-peak rate for most of the week, they can draw in a number of customers. They might make their money on an expensive peak rate charged between 3pm and 9pm on weekdays.
If you don’t use a lot of energy in peak periods (which differ between retailers), that might be a good deal! If, however, you have to do all of your laundry and dishwashing between those hours, you would likely be better off going for the cheapest single rate tariff. Shoulder rates are sometimes used between peak and off-peak periods.
Flexible pricing tariffs are much like time-of-use tariffs, but include another window known as the shoulder window. These windows fall between the peak and off-peak window, and on weekends, they may extend across most of the day.
Time-of-use and flexible pricing tariffs introduce a layer of complexity that might be confusing, but they can also open up opportunities. By knowing when your power is at its cheapest, you can change your usage habits to maximise your cost savings by getting into the habit of using the dishwasher after 9pm, or doing the laundry before 3pm.
Avoiding high energy use in peak periods is the smart choice for your wallet and the grid, since it reduces overall demand. Shifting your use to the middle of the day, when more renewables are generating energy, is also one of the direct ways you can lower your carbon footprint.
Block tariffs charge you one rate for the first x amount of energy you use (per day, month or quarter) and another rate beyond that. The second rate could be higher or lower, depending on the offer.
This kind of tariff might be handy if you don’t use a lot of energy, and the initial block has a cheap rate. You might rarely even pay the higher rate.
Inversely, if you use a whole lot of energy and there is a “discounted” rate beyond the first block, that might be something to opt for.
There’s always more to the story, but learning what makes an electricity bill and how to compare retail offers is strong foundation for energy awareness and literacy. The information above will go a long way towards helping you to decode your next bill, and think through whether it still fits with how you use energy.
You’ll have a better idea of what you’re paying for, when, and why. You might also be a little more aware of how you use energy, and realise other steps you can take to be more efficient. If you’re like us, it might even start to seem . . . fun?