Why is my electricity bill so high?

Fact Checked

With electricity seemingly costing more and more every year, it’s only natural to want to assume the life of a hermit and do away with electricity for good. Regardless of how careful we think we might be, sooner or later we all receive the bill that’s higher than expected. It’s known as ‘bill shock’ and it can sting.

To help you understand your energy bill and how you could reduce it, Canstar Blue has compiled a few reasons why your bill might be higher than expected.

1. Standby Appliances

Standby power consumption or a ‘phantom load’ is a silent energy sucker. Why would you want to use electricity for something you’re not actually using? While individually these devices don’t contribute much, when they team up you could quickly see the power use increase.

Solution:

• Switch these appliances off at the wall, or better yet install a smart power board – the board can cut power to a certain device when it senses it’s on standby mode, but will leave other active devices untouched.

How much is standby power costing you on your electricity bill? Find out with Canstar Blue’s standby appliance cost analysis.

2. Lighting

While a single light bulb might not use much electricity, it all adds up. The more lights you use in your home, the more you’ll end up adding to the energy bill. Incandescent and halogen light bulbs in particular, are notorious for being one of the more energy-sucking bulbs around as they rely on older, inefficient technology to that of newer CFL and LED models.

Solution:

• Switch out your incandescent or halogen bulbs for CFL or LED ones. LED light bulbs are slightly more expensive upfront but offer superior energy savings. CFL bulbs are barely more expensive than incandescent ones but they are slightly less efficient than LEDs. Investing a little more the next time you go light bulb shopping could trim the fat on your next electricity bill.

Could your home lighting set-up be chewing through your power bill? See how much each light bulb type costs to run in Canstar Blue’s home lighting cost guide.

3. Air Conditioner/Heater

For many of us it’s a no brainer that air conditioners and heaters are notorious as energy suckers. Many of us count on our cooling and heating systems in peak seasons. If you’re running your appliance for too long, or it’s operating in a non-insulated or large area, it will not run efficiently and it will quickly run up your energy bill. If an air conditioner is used in a room too large for its capacity, then you’re essentially burning money for little benefit.

Solution:

• Doing away with an air conditioner or heater entirely when the weather is unpleasant isn’t a viable choice for a lot of people. Though, you can hamper costs by combining your fan with the air conditioner in both cool and hot weather. Use the air conditioner to cool or heat the room, and then use the fan to circulate that air. Switching the fan to rotate clockwise in the cooler months can circulate hot air instead of cool air. Every hour saved from the air conditioner can add up in the long run.

How much is running your air conditioner or heater costing you in the winter? Canstar Blue compares usage costs of winter heating appliances in its annual heating price analysis.

4. On/Off-Peak Power Use

You might not be aware that your energy provider may charge a different tariff rate per kWh in peak times. Usually this can differ by 10c per kWh or more compared to off-peak or shoulder times. This means you could be unintentionally paying more for power when using appliances during certain times of the day.

Solution:

• Customers must be aware of their tariff structure to properly monitor their energy expenses. If you’re on a time of use tariff, ensure that you minimise the use of energy-draining appliances in peak times. Using a energy usage monitor may help to mitigate these costs. Alternatively, utilising solar power where you can during peak hours, if you have rooftop panels or a battery system, may also help to reduce high costs.

See what the peak and off-peak usage times are in your area with Canstar Blue’s flexible pricing guide.

5. Energy Allowances and Meter Readings

Some power plans come with an ‘energy allowance’ for which a certain rate is charged. If this is exceeded, customers are charged a higher rate for usage beyond their allowance. Unless your home has a smart meter installed, someone from your distributor will need to physically check your electricity meter.

If it’s inaccessible they may estimate your usage. A bill estimate is indicated by an ‘E’ next to your meter reading. Many retailers simply take estimated readings and later send settlement figures. Sound annoying? You’re right, but there is a workaround.

Solution:

• To eliminate guesswork, installing a smart meter could be beneficial for both you and the energy company you’re with. A smart meter records your energy use in half-hour blocks, for more accurate reporting. If you’re in Victoria then chances are you already have a smart meter, as government policy from 2013 stated that electricity providers must rollout smart meters to all homes.

A note on rising wholesale electricity prices

It’s important to note that Australia’s wholesale energy market is still experiencing significant price hikes which could be impacting power bills for homes and businesses. A rise in wholesale electricity prices was first noted in April 2022, when the Australian Energy Market Operator (AEMO) reported that prices had effectively more than doubled over 12 months. This was attributed to coal-powered plant outages, higher electricity-generating fuel costs and an increased demand on grid power.

While the situation is beginning to de-escalate, wholesale electricity prices are still higher than those experienced historically. If you’ve recently received a shock energy bill, and are unsure what could have contributed to it, this may be a small portion of the blame. However, it still doesn’t hurt to check some of the other tips listed in this guide as well.

If you are worried about how you may afford a shock energy bill, it might be worth getting in contact with your energy provider and discussing any potential payment plan or energy hardship options.

What can I do to save money on my power bill?

When it comes to electricity, being diligent pays off. If your bill is higher than expected, stop and think about what has been different over that payment cycle. If you need a hand managing your electricity usage, there are plenty of new smart technologies which help monitor energy usage and reduce standby usage.

If all else fails, give your energy provider a call and ask them if there has been a change to rates or if you’ve lost a particular discount for some reason – If this achieves nothing, then perhaps it’s time to compare energy providers and consider a switch.

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