Understanding electricity tariffs & charges

It’s no secret that finding a good energy plan is confusing. There are lots of things you need to consider and lots of jargon you will need to decipher. And most importantly of all, you will need to understand exactly how much you’ll be paying for the power you use. So here is a guide to tariffs and fees.

Put simply, the price you pay for energy includes the tariff and any other fees and charges that may apply under the terms and conditions of your plan. So rule number one is: Always read your contract. Note that the tariff listed on your bill does not include GST, which is added to the total amount owning at the end of the statement.

Regulated vs. Unregulated

Some energy retailers have ‘regulated’ offers or tariffs, meaning these prices are set by the respective state government. In Queensland, New South Wales, the ACT and Tasmania, consumers can request a contract with a regulated electricity price, or choose a retail contract. Households in NSW can also ask for a regulated gas contract. It’s worth noting, however, that regulations on electricity prices in Queensland and gas prices in NSW are likely to be lifted in the near future.

In Victoria and South Australia, energy prices are completely deregulated, meaning there are no regulated offers or tariffs for gas or electricity. In these states the energy retailers set their own prices. This has helped to make Victoria the most competitive energy market in Australia, with more than 20 electricity providers to choose from.

Energy tariffs

Your energy tariff is the amount you are charged by your retailer for supplying gas or electricity to your premises. A tariff can include both fixed and variable charges:

  • Fixed charge: This is usually referred to as a ‘daily supply’ or ‘service to property’ charge. As long as your home is connected to an energy distribution network, you will pay a price in cents per day, regardless of your energy use.
  • Variable charge: This is commonly known as a ‘usage’ or ‘consumption’ charge. It is the amount you pay for each unit of gas or electricity, usually listed as cents per kilowatt hour (c/kWh) for electricity and cents per megajoule (c/MJ) for gas.

You should be aware that different variable charges may be applicable under the terms of your contract. For example, with some offers, the first block of energy you use will be the cheapest and set at a particular price. Any energy used over this may then be charged at a higher rate. It could also be the case that the first block used is the most expensive, with a reduction in price following.

In addition, if your electricity metre records when you use electricity, rather than just how much you have used, you can be charged different prices for power used during the day, at night and over the weekend. Some gas tariffs will charge different rates depending on the season, with higher prices during the winter months.

Fees and charges

As well as fixed and variable charges, energy contracts can include a number of additional fees and extra charges that may apply during the term, such as:

  • An establishment fee for setting up your contract.
  • A termination fee for cancelling your contract.
  • A payment processing fee, usually if you pay by credit card.
  • A rejected payment fee if you have insufficient funds in your bank account when a direct debit payment is due.
  • A late payment fee if you don’t pay your bill on time.

Energy price factsheets

To comply with the National Energy Retail Law, energy retailers are required to publish energy price factsheets on their websites for each of their gas or electricity offers. Assessing these factsheets with a good understanding of tariffs and charges will help you to compare offers from different providers. Good luck!

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