Electricity Supply Charges Explained

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Finding the right energy plan for you means understanding your typical power usage, but it also involves picking a provider with a competitive supply charge. While you might try to cut back on how much energy you use around the home to save on bills – and argue with kids about turning off the lights – the fact is that supply charges must be paid regardless of your power consumption. So, finding a cheap supply charge is one of many things to consider when finding a good deal. It could make a big difference to your overall costs.

What is an electricity supply charge?

An electricity usage charge is what households must pay simply for being continuously connected to the energy network. This is a cost usually charged daily in cents, with retailers adding up each daily charge to give you on your next bill. Supply costs typically range from about 80c per day at their cheapest, to more than $1.20 at their most expensive, depending on your retailer and where you live.

As long as you want to be connected to the electricity network and receive power to your home, you’ll need to pay a supply charge. A supply charge may also be known as:

  • Fixed Charge
  • Daily Supply Charge
  • Service Charge (or Service to Property Charge)

The supply charge is not related to your usage – instead this figure on your bill is a daily amount your energy provider charges your property for being connected to the network. Even if you don’t use any electricity in a billing period, this rate will still be deducted provided that your supply is connected. If you’ve ever gone away for a few weeks and come home to a large power bill. Chances are your daily supply charge is the main reason for it.

If you’re looking to cut your overall power costs, you will need to pay close attention to your electricity usage charges. Unlike with your supply charge, you can have a direct impact on how much you pay for your energy usage by being more energy-efficient around the home.

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Where do I find the supply charge on my bill?

On your electricity bill, a supply charge is shown as cents per day, and as the total amount for the billing period. Note the highlighted row below. In this case, you can see the customer pays $1.007 per day for electricity supply, which adds up to $91.61 over the 91-day billing period.

Why is there more than one supply charge on my bill?

Some households with a controlled load tariff, in addition to their standard tariff, will be charged an extra daily supply charge. This is because a controlled load is a separated metered tariff for appliances like hot water systems and pool pumps, which could also demand a daily supply charge. Whether you need to pay this extra supply charge depends on which energy distribution network you happen to live on. The good news is that these costs are usually small in comparison to standard supply charges, often just 3 or 4 cents per day.

In the example snippet taken from a price factsheet, below, you can see three ‘Peak Anytime’ (usage) charges, which are your standard charges, and daily supply charge added to this. A separate controlled tariff also has its own supply charge added. In this case, the customer will be paying 84.10 cents per day for standard supply and an additional 3.60c per day for controlled load supply.

Why do I need to pay a supply charge?

The cost of energy distribution (i.e. maintaining the poles and wires) makes up a significant part of your overall power costs, with distributors in each state passing their costs onto the retailers, who then pass them onto their customers. You could think of supply charges as the costs incurred by your retailer for supplying energy to your property, especially given that it’s the local distribution company that actually sends someone to read your energy meter (if you don’t have a smart meter) every few months.

Why understanding supply charges is important 

In the example bill above, you can see that the cost of electricity supply is relatively small in comparison to the cost of electricity usage. However, this will not be the same for all households. For those with low energy usage, the supply charge will make up a higher proportion of their overall energy costs, while for customers with higher energy usage, the cost of supply will likely make up a lower proportion of overall costs. As a general rule:

  • Households with low energy usage should pay particular attention to the cost of supply
  • Households with high energy usage should pay particular attention to the cost of usage

But of course, it’s wise to pay attention to all costs.

Also, consider that energy retailers have a habit of giving with one hand and taking away with the other. If you find a plan with low usage rates, the retailer may compensate for this with higher supply costs. It also works the other way around.

Electricity supply charges in Australia

So, what do electricity supply charges actually look like, and what can you expect to pay per day? To offer a guide, here are some examples of average electricity supply charges based on five prominent retailers in each state:

State

Average Electricity Supply Rates

New South Wales

90.45 c/day

South Australia

92.90 c/day

Queensland

112.32 c/day

Victoria

119.41 c/day

Based on selected postcode in each state, August 2018. General guide only.

As you can see, households in Victoria and Queensland generally pay the highest supply charges, while average rates in NSW and South Australia are generally much lower. However, this is not necessarily a reflection of which states pay the highest prices overall. In many cases, energy retailers will compensate for high supply costs with low usage charges, and vice versa.

Who sets electricity supply charges?

Electricity supply charges are set by individual retailers, or by state governments, depending on whether you live in a state with a deregulated electricity market or not. In Victoria, New South Wales, South East Queensland and South Australia, electricity retailers are free to set their own supply charges, along with usage rates and other terms. Meanwhile households in Western Australia, Northern Territory, Tasmania and regional Queensland have their charges set by their respective governments. Energy prices in these areas remain regulated.

When do electricity supply charges change?

Provided that you’re on a variable rate market offer, electricity retailers can change their supply charges whenever they feel like. However, they must give written notice of this. Households on a fixed rate plan have their supply charges locked in for a set period. In general, supply and usage charges are amended every 12 months – July in most areas and January in Victoria.

Some companies, however, have been known to change their prices on a regular basis, so it’s important to keep an eye on your bills as well as any other communications from your retailer as these may include important information about price changes.

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