What makes up your electricity price?

From the power station to your wall socket—this is how your electricity price comes about.

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When you receive your electricity bill, it’s natural to skim straight to the total cost. But do you know what makes up that final cost? A lot goes into it! 

The price of your electricity is usually referred to as ‘cents per day’ (your supply charge) and ‘cents per kilowatt hour’ (your energy charge)—and these take into account much more than just the energy itself.

Your electricity price is comprised of five main parts:

  1. wholesale electricity costs

  2. network costs (poles and wires)

  3. state or territory government schemes and levies

  4. national government schemes

  5. retail services and other costs.

Even though you don’t see these terms listed on your energy bill, they all play a part in making up your total electricity price. We’re here to shine a light on what each component is, and what they mean for you.

Wholesale electricity prices
This is your energy—ready to transmit. Whether your energy is generated by coal, wind, hydro or the powerful rays of the sun, once generated, it goes on the wholesale market.

In the ACT and NSW, we’re part of the National Electricity Market (NEM), which is a wholesale market that energy retailers, like ActewAGL, purchase your electricity from*. The wholesale cost is set every 30 minutes and fluctuates depending on the supply and demand at the time.

Network costs
When your energy is generated, what happens next? The transmission and distribution networks ensure that your energy can get to you safely and efficiently. High voltage transmission lines can take your electricity a long way, but the voltage is too high for your local poles and wires. The energy passes through transformers to convert it to a lower voltage so it can be sent to your home, your office and your local coffee shop—ready to light up your day.

We all understand the vital role energy plays in your everyday life, and your energy distributor has a big responsibility in this. In just the ACT, your energy distributor (that’s Evoenegy) has over 53,000 power poles and 2,394kms of overhead lines to maintain^. Connect those wires together and that’s enough to create a zipline from Canberra to Auckland—and this doesn’t even include the almost 2,700 kms of electricity wires underground. 

National, state or territory government schemes and levies
There are a number of government environmental schemes, at both the federal and state levels, that also play a part in the price of your electricity. The Large-scale Renewable Energy Target (LRET) and the Small-scale Renewable Energy Scheme (SRES) are examples of Australian Government schemes designed to reduce greenhouse gas emissions in the electricity sector#. Similarly, the ACT Government’s renewable electricity targets are also taken into account. The cost of these government schemes can fluctuate year to year, which can affect your electricity price.  

Retail services
Here, we have the the retail component of your electricity price—this is where ActewAGL come in. Your energy retailer is your connection to the wholesale electricity market. From the heart of Canberra to the heart of your home, we buy the electricity from the NEM for you, arrange your meters, billing and connections and ensure you’re empowered to manage your own energy at every step of the way.

We’re proud to be your local energy retailer, and along with our predecessors, we’ve been committed to the capital region for over 100 years. With all our operations based in Canberra, you can have peace of mind knowing that you’re powering the businesses, people, organisations and events that make our city such a great place to live.

Waste less, save more
We understand that our city’s energy is an important resource we all share. Understanding your electricity pricing and how your bill comes about is the first step to reducing your usage. Check!

If you have time-of-use (TOU) pricing, your energy pricing is driven by the time of the day—these are referred to as ‘peak’, ‘shoulder’ and ‘off-peak’ periods. This is why your energy might be more expensive on weeknights when everyone is cooking dinner or popping on a load of washing. An easy way around this is to time-shift your appliances to off-peak times. Take advantage of the inbuilt timers and set your dishwasher and swimming pool pump to run overnight, do your laundry on the weekend or while you’re at work. These are all small changes that add up to make a big difference on your next bill.

Get the most out of your electricity with energy saving tips tailored for Canberra in our ‘Power to save’ booklet.

You’ve probably heard the words ‘green energy’ and ‘carbon offset’, but if you’re looking for more information to decipher all of those renewable energy buzzwords, visit our Green Glossary.

Feeling like you’re on a roll with electricity pricing and keen to learn more? Take a look at more pricing information and FAQs.

With set, regular payments and our lowest energy rate, it has never been simpler to save. Whether you’re new to local energy, or you’ve been with us for a while, connect with our expert team of locals for powerful energy advice to find the best plan for you—call 13 14 93. 

References

*Energy.gov.au

^Evoenergy.com.au

#CleanEnergyRegulator.gov.au

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