Energy plans can be confusing. Here’s what you need to know

Cutting through the waffle to explain how energy pricing works.

Energy prices explained

We are bombarded with messages about changing our energy retailer to save money, but the plans are often confusing.

The price you pay for your energy service includes the tariff and any other fees and charges that may apply under your contract.

Some retailers have offers or tariffs that are ‘regulated’, meaning the price is set by the government.

In Queensland, the ACT and Tasmania, you can ask for a contract with a regulated electricity price. 

In New South Wales, Victoria and South Australia, there are no regulated offers or tariffs (for electricity or gas), which means that energy retailers set all of their own prices.

What is a tariff?
Your tariff is the amount charged for providing energy under your contract. It includes both fixed and variable charges.

The fixed charge is not based on how much energy you use. It will be separately identified on your bill and is often called the ‘daily supply charge’ or ‘service to property’ charge. It can be displayed as a daily rate on your bill but may appear as a single figure for a billing period.

The variable charge or consumption charge is the amount you pay for each unit of electricity and gas you use. It is listed on your bill as cents per kilowatt hour (c/kWh) for electricity and cents per megajoule (c/MJ) for gas.

It is important to note that different variable charges might apply in the one bill:

  • depending on how much energy you use. With some offers, the first block of energy used is the cheapest, with any energy used over that charged at a higher rate. However, other offers may charge a higher rate for the first block, with extra energy charged at a cheaper rate.
  • if you live in a house that has certain appliances that are separately metered and operate overnight; for example: storage hot water systems or slab heating. You may see this listed as an off-peak tariff on your bill. These off-peak tariffs are normally cheaper as electricity demand is lowest overnight.
  • if you elect to have renewable energy or GreenPower added to the cost of your electricity or gas. This can be charged as a higher variable usage price, but sometimes can be included as a fixed amount (per week, or billing period).
  • according to when you use your electricity and gas. For example, if your electricity meter records when you use electricity (rather than just the total amount used), you can be charged different prices for electricity used during the day, at night and on weekends. Some gas tariffs also change depending on the season, charging different rates in winter and summer.

The variable and fixed charges that make up the tariff are usually listed on the second page or on the back of a one-page electricity or gas bill. Look in the section where the cost of your bill is calculated.

Energy tariffs can change during a billing period. Your retailer will provide you with written notice of this change, usually with or on your next bill. If this happens, your bill will show you the amount of energy used at the old tariff rate and the amount of energy used at the new tariff rate. If you are unsure about the information on your bill, you should contact your retailer.

Fees and charges explained
Energy contracts can include a number of fees and extra charges. The following are examples of the types of fees that may apply to your energy contract:

  • an establishment fee for setting up your contract
  • a termination fee for leaving your contract early
  • a payment processing fee, for example, if you pay by credit card
  • a fee, if you have insufficient funds in your bank account when a direct debit payment is due
  • disconnection or reconnection charges, or a charge if you request an extra or special meter reading.

When such fees are charged, your retailer will typically list these fees and charges separately on your bill. If you are unsure about any fees that appear on your bill, talk to your retailer.

Do you understand your energy bill? Should companies be forced to offer simplified energy plans?

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    All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances. 


    To make a comment, please register or login
    11th Jul 2018
    What about the other half of Australia?
    11th Jul 2018
    Western Australia and Northern Territory are not mentioned. Maybe half of Australia area wise, but less than 20% of the population.
    11th Jul 2018
    I cant work it out more so these days, odd how when I talked to my provider about going somewhere else suddenly my bill was cheaper
    Fluffy Duck
    11th Jul 2018
    In regional qld we have no choice. One supplier.
    13th Jul 2018
    Fluffy, you probably get your supply from Ergon which supplies 97% of the states power. I just had a quick look at their P&L for the 2017 FY. While they are paying out $111m in return to grid costs it has dropped by around $6m from last year, but there is a sharp increase in operating costs.
    Profit was down from the previous years $942m, where no dividends were paid, to $881m. I suspect the State government has had to use the money repay the borrowings from the Sate Public Service Superannuation Fund?
    Seems odd to me that if the parent company, Energex which is owned by the state government, makes close to $1b profit each year, then why then does the state government complain about high prices to the consumer??
    Why did QLDers vote against selling off Ergon?
    Seems to me that paying higher than necessary power prices is just the same as paying tax?
    11th Jul 2018
    What is difficult about understanding your account. It is the simplest of basic maths. Multiplication and addition only. Just how complicated is that?
    11th Jul 2018
    agree with you Sceptic,
    Problem is the retailers usually say discounts by way of a percentage which is misleading and deceptive as true per kwh or daily rates etc costs are then not disclosed.

    Also separately but an important issue is as follows.

    To get electricity to the users property, you only need certain important ongoing basic infrastructure works. That is generation, transmission and control. These days there are lots (100s) of retail companies and generation companies all with their multiples of Boards of Directors, CEOs, CxOs, upper managements, admin depts., I.T. depts., multiple billing systems, strategy, sales forces, call centres, marketing, advertising, commission agents, plush CBD offices etc. Those costs are enormous, make up a significant proportion of the bill and completely unnecessary.
    Lark Force
    11th Jul 2018
    YES, private enterprise has really lowered prices? - not just in Power/Gas Supply but Telephone/Mobiles/Petrol/Health Services, all the necessary things people need.
    We've all been had and can't do a thing about it. Just shut up and pay up!
    If we talk about going back to Gov't ownership we're labelled Commo's.
    The thing is, Gov't owned utilities don't contribute to political parties election campaigns. So there'll be no talk of nationalising any of these essentials.
    12th Jul 2018
    Yes Lark but it seems Capitalist societies are now failing their population and the commies like Russia and China are actually building a middle class. Perhaps somewhere in the middle would be a good spot.

    Fussing about communism while paying billions to communist governments for electricity smacks of stupidity in my opinion.

    11th Jul 2018
    To compare providers - just look at the differences in fixed supply charges and tarrifs

    then use your average annual consumption to plug into each providers cost sheet and see under which providers pricing you have the greatest savings/ lowest cost

    Each household consumption profile is different
    11th Jul 2018
    What you need to look at is what the ACCC has stated today!!!!
    11th Jul 2018
    ACCC have been sleeping for so many years while this issue built up. Glad they woke up now, however does it matter?
    The bottom line is what the Govts plan to do - no idea yet and definitely not holding my breath.

    ACCC has also been sleeping on many other fronts - Private Health Insurance high / increasing costs vs low value, Petrol prices (have we all given up?), we all heard about Banks since the RC.
    11th Jul 2018
    Petrol prices are ridiculous as far too much tax in the cost. Luckily we don’t need much compared to workers.
    Private Health Insurance is more affordable than in America thankfully. One dinner out costs the same as one week’s PHI cost if you shop around and choose wisely.
    Pressure needs to be put on power providers as they have been found wroughting big time. Laws need to happen. Solar needs to go on every roof.
    13th Jul 2018
    Private Health Insurance is the biggest cost issue - if you have it! Unless you go for cheap policies which won't help you much when the time comes or a specific need arises.
    My main point was the "Sleeping ACCC" - usually missing in action, then once they make a statement, no further action by Govts nor by this toothless tiger.
    11th Jul 2018
    Clear as mud & so annoying there are so many components to bills, in the good old days you had a supply charge & off peak & peak usage, bring back simple bills.

    12th Jul 2018
    50% of your energy bill is paying for the expensive infrastructure built by government
    Stop blaming private enterprise for the inefficiencies of government
    Lark Force
    12th Jul 2018
    Paid for by taxpayers and benefits Private Companies!
    12th Jul 2018
    Yes. Government should be prevented from using tax dollars or debt to build anything now. They have spoken very well about private being best so let private get on with building their own infrastructure and businesses.

    I'm not exactly sure what you'd call government builds using public money for private use of profits by corporations but it sure isn't capitalism is it?
    12th Jul 2018
    Lark - the supply charge is to recover the cost of the infrastructure bought at exorbitant prices from the government and for maintenance and future replacement
    The taxpayer and the government made money from the deal
    20th Jul 2018
    New report just in:

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