Electricity costs are something consumers don’t often like to think about. Once you have set up your electricity account, many of us won’t review our bills closely or question the information we’re provided. It’s called ‘setting and forgetting’ and it could be a costly mistake. There is a lot to consider when it comes to finding the best value electricity plan, so in this article we aim to tell you everything you need to know about the New South Wales electricity market – to help you make the most informed decision possible.
History of the New South Wales electricity market
For most of its history, the New South Wales Government strictly regulated most industries – including the energy sector. Generators, distributors and retailers were centralised under the management of the Electricity Commission of New South Wales. During the 1990s,the industry underwent a major restructuring with the objective of unbundling these three functions into separate businesses. Although each function remained Government owned at the time, EnergyAustralia and AGL became sole electricity retailers, while wholesale electricity supply was integrated into the Australian National Electricity Market (NEM).
In 2002, New South Wales became one of the first (along with Victoria) to introduce Full Retail Competition which allowed private electricity companies to enter the market. However electricity rates remained set through regulation. Following the complete deregulation of electricity prices in Victoria in 2009, pressure was mounting on New South Wales to do the same. After an enquiry into the matter, the Government identified $5.4 billion in seemingly non-beneficial infrastructure expenditure and operating costs by distributors that would be passed onto consumers unless something was done. In 2014, electricity prices became completely deregulated with the goal that, in order to remain competitive, electricity retailers would soak a large amount of the distributors’ debts instead of passing them to consumers.
NSW electricity market today
A deregulated energy market is intended to increase competition, encouraging retailers to offer better value to customers in order to attract market share. In theory, the effect of this is to drive down prices, thereby lowering your electricity bill. Importantly, price deregulation does not mean that electricity retailers can charge whatever they want. Alongside the deregulation amendment acts, the government also introduced the Independent Pricing and Regulatory Tribunal (IPART) to play a ‘watchdog’ role on the New South Wales electricity market. Each year, this body reviews the market to ensure its effectiveness, and report non-competitive actions from retailers.
The competition policy has had varying success (depending on who you ask). There are now more than 25 retail brands currently active in NSW – eight of which have entered the market since July 2014, including ElectrAG, Mojo Power, Urth Energy, 1st Energy and Salvant Energy.
Despite this competition, customers in some electricity networks have noticed a climb in rates. IPART and the Australian Energy Market Commission attribute these increases largely due to network infrastructure spending, some of which is being passed on to consumers through fixed charges.
Electricity networks, including power poles and wires are owned and run by electricity distributors, not the retailer you purchase power through. If your area experiences power loss, your distributor is who you need to contact. There are four New South Wales electricity distributors, each responsible for servicing separate districts:
- Endeavour Energy: Responsible for a region covering approximately 24,500 square kilometers of NSW. The major towns and cities it distributes to include Blacktown, Campbelltown, Liverpool, Parramatta, Penrith and Wollongong.
- Essential Energy: Responsible for a region covering approximately 582,000 square kilometres of NSW. The major towns and cities it distributes to include Albury, Bathurst, Dubbo, Grafton, Port Macquarie, Queanbeyan, Tamworth and Wagga Wagga.
- Ausgrid: Responsible for a region covering approximately 22,275 square kilometres of NSW. In addition to being responsible for Sydney’s electricity supply, the major towns and cities it distributes to include Barry, Merriwa, Nelson Bay, Scone and Waterfall.
- Transgrid: The Transgrid network stretches all along the east coast of Australia and inward as far as Broken Hill. TransGrid has become the first New South Wales electricity distributor to be privatised, having recently been purchased for a staggering $10.3 billion.
Electricity prices in NSW have only been deregulated since 2014 and some consumers are yet to explore the benefits of a deregulated electricity market. Customers who were on a Government regulated electricity rate prior to July 2014 and have not yet moved onto a retail market agreement have been automatically placed on a ‘standard retail contract’ on a rate charge called a ‘transitional tariff’.
These tariffs are 1.5% cheaper than the regulated price, though IPART insists market contracts are more affordable. Standard retail contracts are generally considered “benchmark” contracts, however they remain available to consumers who have switched to market retail contracts. The contracts vary depending on the provider, so contact your preferred retailer for more details.
Electricity bills explained
There is a lot of information on your electricity bill, so it’s perfectly understandable if you aren’t quite sure what it all means. The pricing structure that electricity retailers use is called a ‘tariff’. The tariff types available to you will largely depend on your location and electricity retailer, though those living in urbanised areas will likely be given a choice through most retailers. There are two components to a tariff.
Fixed/supply charge: A flat rate charge imposed for the expense of remaining connected. It remains the same regardless of energy usage and is displayed separately under your power bill summary.
Demand/variable/usage charge: A charge dependent on the amount of electricity your household uses, this is measured in Kilowatts per hour (KWh) and is recorded by an electricity meter.
Types of electricity tariffs
- Single rate – A rate tariff that remains the same regardless of the time of day or year.
- Block rate – A usage rate calculated based on blocks of usage. With tariff blocks, you pay one rate or charge for the first part of usage, and then you pay a different rate for the next part(s) of your usage. A block can be either a day month or quarterly usage.
- Controlled/dedicated load – Controlled load is a separate feed of electricity. You may have a controlled load if you use slab heating or an electric hot water system. Your electricity retailer charges you a different rate for your general electricity usage and your controlled load.
- Time of use rates – Many energy retailers offer plans that charge a different rate at different hours of the day. Rate times can vary marginally depending on your retailer, so you will need to contact your provider for full details.
Off-peak – During hours of low electricity usage, many electricity plans will charge a substantially lower rate. As a general rule, the off-peak hours are usually from 11pm to 7am.
Shoulder – A shoulder rate is applied during periods of mild electricity usage. This rate is usually applied during mid-day.
Peak – A peak rate is charged at times of heavy electricity demand. Peak times are usually between 5pm and 9pm, but times can vary slightly between retailers.
Additional fees and charges
These are the additional expenses added onto your account which can be easy to overlook.
- Termination fee – A fee charged for early exit of a contract.
- Establishment fee – A fee charged for setup and connection.
- Payment processing fee – Like with many services, there is often a nominal charge for processing your payment.
- A late payment fee – Usually a flat fee charged on overdue electricity bills. Payment times can be negotiable to help you avoid this charge.
Most energy retailers offer discounts on a part of your power bill, but only if you meet specific requirements. These discounts include:
- Pay on time discount – A discount for paying your energy bill by the due date. Not all retailers offer pay on time discounts and the amount discounted varies between retailers. Discounts usually range from 5% to 15%, but have been known to go as high as 35%. Some discounts apply to your entire bill, but others take the discount from just one part of the total amount.
- Loyalty discounts – Like many other industries, some electricity retailers reward long term customers with reduced electricity charges.
- Feed-in tariff – An electricity rebate for households that ‘feed in’ to the grid, mainly made possible by generating solar power using solar panels.
- Bundle discount – Some electricity retailers which also operate in other industries (such as natural gas or telecommunications) offer discounts when you hold multiple accounts.
Sign up incentives
Some electricity retailers provide extra incentives to encourage consumers to switch to their service. For example, Lumo Energy offers Velocity Frequent Flyer points for each dollar spent on electricity bills paid on time, while AGL customers can earn Flybuys points. Other sign up offers are also quite common, such as an increased pay on time discount.
At the time of writing, there are four electricity rebates available in New South Wales to low income households and households with high electricity usage for medical purposes.
Low Income Household Rebate: A rebate of $235 is available to low income households where the person holds a Pensioner Concession Card, DHS Health Care Card or eligible DVA Cards.
Family Energy Rebate: If you’re eligible for Family Tax Benefit A or B, then you may also be eligible for a $150 annual rebate. To apply, simply fill out the application form via the Department of Industry Resources and Energy.
Medical Energy Rebate: If someone in your household has a medical condition making it difficult for them to self-regulate their body temperature, therefore requiring an air conditioner for heating or cooling, your household may be eligible for a single annual rebate of $235.
Life Support Rebate: Quadriplegics with electric wheelchairs or those requiring a form of life support system may, upon application, be eligible for a rebate on electricity usage. The size of this rebate depends on the amount of electricity is used by the support systems.
Electricity meters measure the electricity usage of your home or business. This information is collected by the distributor and then passed to the retailer for billing purposes. There are three general types of electricity meters that can be found in New South Wales households. They are traditional meters, interval meters and smart meters.
Most New South Wales homes use a traditional meter. If you have one these meters, you are charged a single rate – regardless of time of use. If you want to know how to read a traditional meter, it is important to recognise there are two types of common meter interfaces. The first will display a series of white, black and red numbers. Simply read your usage from left to right while ignoring the red numbers as they are for testing purposes. The second type of meter uses dials. These dials record usage by noting the using ‘clock hands’ that point to a number. If the hand is in between two numbers, use the lower number. Again, if there is a red dial – ignore it, this is for testing purposes. In the below illustration, the meter reading is 1394 KwH.
Premises with traditional meters will notice under the ‘meter readings’ section of your electricity bill that there is an ‘A’ or an ‘E’ next to your usage measurement.
An ‘A’ means ‘Actual’, meaning someone came to your household to get an actual reading. An ‘E’ means estimated, meaning that the retailer has estimated your usage. An estimation is usually made where the meter reader is unable to access your meter. If the estimate is too low or too high, your next bill will be either higher or lower to account for this, meaning you only pay for the electricity you use. If you need a little more help understanding your bill, Energy Made Easy has an interactive bill to help you out. Alternatively, most retailers will have a section on their website to help you understand your bill.
Interval meters record electricity usage every 30 minutes, allowing for different electricity tariffs to be charged at different times of the day for those on ‘time-of-use’ plans.
All interval meters are electronic and are quite simple to read. The display will show the time and date (EST) as well as the total electricity consumption in KwH for that time period.
Smart meters were widely installed in homes and businesses in Victoria from 2009, however north of the border, smart meters were only introduced In October 2014 through a voluntary market-led rollout in an effort to encourage competition in metering services. Smart meters digitally collect information about your electricity usage and send this to your distributor for billing.
This also allows for live usage data to be tracked via web portals for consumers who purchase or receive electricity through AGL, Australian Power & Gas, EnergyAustralia, Powershop, Lumo Energy, Origin Energy, Jemena, AusNet Services and United Energy.
Choosing the best electricity retailer
In New South Wales, electricity customers can choose to receive their supply from the standard retailer for their area (under a standard form contract) or take up an energy offer with another retailer. NSW has very strict requirements around the marketing behavior of retailers to ensure customers are treated fairly, so if you’re ever approached or called by a retailer, keep in mind that you hold complete liberty over which you choose.
A good place to start when comparing electricity retailers is Canstar Blue’s customer satisfaction ratings to see how New South Wales customers rated their providers. If you just want to find the cheapest tariff rate, the Federal Government’s Energy Made Easy website will help you along the way. There are also various websites dedicated to helping you compare tariffs and prices.
Negotiating your electricity bill
The New South Wales energy sector is a competitive industry, meaning that consumers have a sizeable degree of negotiating power. If you feel that your electricity bill is a little high, don’t be afraid to shop around and see if you can find better value. Before changing retailers though, let your current provider know you’re considering a switch, as they might try and beat its competitor’s price.
If you ever feel like your energy retailer is not meeting its contractual obligations or believe there has been some misconduct, such as unfair billing, contact the Energy and Water Ombudsman (NSW) which will investigate on your behalf for free.
Green energy options in New South Wales
Most of us have become climate conscious to varying degrees. But did you know that you can have your energy generated from renewable sources for minimal cost and effort? A number a major electricity retailers offer ‘environmentally-friendly plans’, most of which are accredited under the GreenPower Accreditation Scheme. By signing up to one of these plans, you are instructing your retailer to source a percentage of its electricity from renewable sources. As an example, Origin Energy offers a GreenPower plan with which, for only $1 per week on top of your standard electricity bill, Origin will source 25% of your energy usage from renewable sources. Many other retailers offer a similar deal, but always check how much extra these plans will cost you.
Solar energy is probably the easiest option for households and small businesses to source their own green energy. Not only is solar energy environmentally friendly, but it can also reduce your electricity bill – sometimes drastically. Solar PV (photovoltaic) panels convert the photons of sunlight into useable electricity which, depending on your system size, could cover most of your electricity needs.
Small-scale technology certificates: The Federal Government offers ‘Small-scale Technology Certificates’ (STCs) to households that install a form of renewable energy generation (wind, hydro or solar). Depending on the electrical output of the green installation, as well as geographical location, a person may be eligible to receive a number of STCs. You can calculate how many of these certificates you might be eligible for using the small generation unit calculator.Federal law mandates electricity providers collect a quota of STCs each year, meaning they are in high demand and can be sold on the market for cash. The easiest way to sell these certificates is to allow your installer to sell them on your behalf in exchange for a reduced installation price. To maximise your return however, STCs can be sold on the market where price is determined by market forces. Alternatively, they can also be sold via the STC clearing house for $40 per certificate.
Feed-in tariffs: Solar panels collect electricity from the sun, but they are not able to hold this energy for long. If your house is unable to use all the electricity that your solar panels are producing, then any excess electricity will be redirected into the electricity grid to be used by another customer. For each kilowatt of excess solar electricity that your premise redirects into the grid, you will receive a small discount on your electricity bill called a ‘feed-in tariff’. Feed-in tariff rates depend on location, as well as supply and demand. Below is a list of approximate feed-in tariff rates over the last five years:
|2011/12||5.2 to 10.3 c/kWh|
|2012/13||7.7 to 12.9 c/kWh|
|2013/14||6.6 to 11.2 c/kWh|
|2014/15||4.9 to 9.3 c/kWh|
|2015/16||4.7 to 6.1 c/kWh|
Check IPART’s final report and website for more details on how the benchmark range was determined. To view current feed-in tariff offers, and details of all energy offers available in your area, visit the Australian Energy Regulator’s price comparison website.
Find a solar retailer
There are a number of solar panel providers and installers operating across New South Wales. To be eligible for the STCs, the solar panels must be installed by a company that has been accredited by the Clean Energy Council (CEC). Retailers can also voluntarily sign up to the CEC’s code of conduct, indicating that the company will operate using best practices. For these reasons, it’s advised that you only operate through CEC recognised companies. Solar panels are quite a significant purchase for most households, so if you’re unsure about a solar retailer or installer, it’s in your best interest to probe the company to insure they are reliable and experienced.
Other solar considerations
Solar companies should provide a quote before fixing a permanent installation to your home. Before forking out the money for the quote though, you should consider these few things:
- Your roof is large enough (usually requires a 15 square meter minimum).
- The roof is strong enough to support the weight of solar panels.
- You are the property owner.
- Your home faces the right direction. Only north-facing panels will produce at full capacity.
- Your roof has access to sunlight and is not shadowed by trees.
- Get multiple quotes to make sure you find the right deal.
- Check if any local government permission is required.
Following this guide, you can hopefully now navigate the seemingly daunting New South Wales electricity market with a lot more confidence. If you haven’t reviewed your electricity plan in a while, there is no better time than now to get out there and find the best deal.