Gaining a comprehensive understanding of your cheap electricity bill is crucial to ensure you're getting the best value for your money. While most people can grasp the concept of usage charges, you may have noticed a persistent item on your bill known as the supply charge, which seems to linger regardless of your actions.

This informative piece will delve into the following topics:

• Decoding supply charges

• Can switching electricity providers lead to lower charges?

Decoding Supply Charges

Your bill consists of two distinct charges: usage charges and supply charges. When you examine the details, you might encounter terms such as daily supply fee, fixed fee, or service charge—all referring to the supply charge.

• Usage Charges versus Supply Charges

The usage charge represents the cost per kilowatt-hour (kWh) for the electricity you consume. On the other hand, the supply charge is a fixed daily fee that covers the cost of keeping you connected to the energy network, also known as the "grid." It is important to note that the supply charge remains the same irrespective of your daily energy consumption. Even if you're away and don't utilize any electricity, you will still be required to pay the fixed fee as shown on your bill.

• Understanding the Purpose of the Supply Charge

The electricity distributor in your area imposes the supply charge to cover the expenses associated with maintaining the infrastructure, such as poles, wires, meter installations, upgrades, readings, and emergency repairs. Since these costs vary across different geographical regions, each distributor sets its own specific amount.

• Determining Supply Charges

In deregulated energy regions such as Victoria, New South Wales, South-East Queensland, ACT, South Australia, and Tasmania, individual electricity companies have the autonomy to establish their supply charges. In other areas, the state governments regulate the cost, which is then charged by the designated electricity company.

• Assessing Your Supply Charge

The amount you are charged for the supply depends on your retailer and the specific distributor assigned to your location. On average, supply charges in Australia range between 80 cents and $1.20 per day. Your retailer will accumulate this charge over the quarter and present it on your bill. As a reference, customers with the leading energy retailers, namely Origin Energy, EnergyAustralia, and AGL, typically encounter these average charges in each state:

• Victoria - 113.20 cents/day

• Queensland - 112.16 cents/day

• South Australia - 95.25 cents/day

• New South Wales - 90 cents/day

Don't be disheartened if you reside in one of the costlier states. Retailers often compensate for higher supply fees by offering discounted usage rates, ensuring you don't necessarily incur exorbitant bills. For instance, electricity providers in Queensland frequently provide generous solar feed-in tariffs or discounted rates to offset the relatively high daily fee. To ascertain your specific charges, refer to your most recent electricity bill, where you'll find the cost per day as well as the total amount for the billing period.

• Settling Your Supply Charge

While it is the electricity distributor in your area that imposes the fee, you will make the payment to your retailer, who will subsequently remit it to the distributor on your behalf. This streamlined process ensures you receive only one bill and make a single payment each quarter.

Since the supply charge remains fixed, the most effective approach to reduce your bill is by minimizing your overall energy consumption, subsequently lowering your usage charges. Additionally, you can compare plans offered by multiple retailers to secure the best deal, enabling you to pay less for your energy usage through discounted rates and off-peak tariffs.

• Understanding Multiple Supply Charges

If you encounter an additional supply charge on your bill, it is typically associated with the type of tariff you have. A controlled load tariff employs a separate meter to monitor the usage of specific high-load appliances, such as hot water systems and pool pumps. Consequently, there will be a separate supply charge for this additional meter, which is significantly lower than your main daily fee, often ranging from just 3 to 4 cents per day.

Can Switching Electricity Providers Lower Your Supply Charge?

If you reside in a deregulated energy market, you have the freedom—and indeed the obligation—to regularly compare electricity plans to ensure you're securing the most advantageous deal. It is recommended to compare options whenever you relocate to a new area or at least once every 12 months in your current residence.

When evaluating energy plans, it is essential to consider various aspects to determine the most cost-effective option for your specific needs. Factors to assess include:

• Daily supply charge

• Usage charge per kWh

• Discounted rates

• Off-peak tariffs

• Solar feed-in tariffs

• Special offers

• Absence of lock-in contracts

Given the multitude of variables to consider, seeking assistance from professionals is a prudent choice. Utilizing a comparison service like CheapBills enables you to explore plans from a variety of reputable providers, identifying the perfect match for your home's energy requirements.

Moreover, CheapBills supports fundraising endeavors through their partnership with iCause. When you compare and switch electricity providers, a donation is made to your nominated crowdfunding campaign. If you are moving to a new area, consider reaching out to Move-In Connect, a moving utilities service that can facilitate all the necessary connections in time for your relocation.

In Conclusion

The supply charge constitutes a significant portion of your energy bill and remains a fixed fee, making it impervious to direct influence, unlike your usage charges. Therefore, when relocating or changing your electricity plan, it is advisable to select a plan with a low daily supply charge while also considering rates and tariffs that align with your specific requirements. However, keep in mind that retailers offering a lower supply charge may compensate by imposing higher usage charges, and vice versa. Engaging with an expert can provide valuable guidance and potentially save you hundreds of dollars annually.