Electricity Supply Charges
Have you ever wondered what the supply charge on your electricity bill is for? Find out all about energy supply charges here with Savvy.
Fact checked
When it comes to your electricity bill, supply charges form a significant portion of the total bill. Unlike usage charges, supply charges remain constant, regardless of your electricity consumption. But how does your retailer determine the rate of these supply charges? Is there anything you can do to reduce them? Find out the answer to these and many more questions about supply charges here with Savvy.
What are electricity supply charges, and how much are they?
Electricity supply charges, also known as daily supply charges, are fixed fees applied to all electricity bills which cover the cost of maintaining the infrastructure that delivers electricity to your home or business. They are measured in cents per day, and range from around 74c per day up to $1.40 per day. How much you’ll pay as a supply charge on your energy plan depends on a number of factors:
- the state or territory you live in
- which network you are connected to
- the type of plan that you are on
- which retailer you are with
How do I calculate how much my supply charge is going to be?
Calculating your supply charge is quite simple. To get the total supply charge for a billing period, multiply the daily charge by the number of days in the billing cycle. Remember the charge remains constant, regardless of your electricity usage.
For example, the majority of people in Australia receive their power bills per quarter, which is every three months. To calculate the supply charge for a three-month (90-day) bill period, follow these steps:
- Find your daily supply charge on your electricity bill. Let's say it's 0.75 cents per day
- Multiply the daily supply charge by the number of days in the billing period.
- For a 90-day period: 0.75 (daily supply charge) x 90 (number of days) = 67.50
So, the supply charge for a 90-day bill period would be $67.50.
How much on average are supply charges around Australia?
Look up the state or territory where you live to find out what the average electricity bill supply charge is:
Average electricity supply charges per state:
Daily supply charges in Queensland can range from 0.85 cents to $1.50 cents per day, depending on the energy provider.
The average supply charge in New South Wales ranges from 0.80 cents to 0.93 cents per day.
The average supply charge in the ACT varies between 0.84 cents and $1.05 cents per day.
The daily supply charge varies between 0.78 cents and 0.99 cents per day.
The average supply charge in South Australia falls between 0.88 cents and $1.34 cents per day.
Tasmania's daily supply charges range from $1.26 cents per day for Tariff 93 plans, to $113.77 cents per day for residential flat rate plans through Aurora Energy.
Daily supply charges in the Northern Territory are 0.52 cents per day for the residential standard tariff, and 0.82 cents per day for commercial supply.
The daily supply charge for A1 and A2 tariffs (residential customers) is $1.10 cents per day
For B1 tariffs (residential hot water tariff) it is 0.23 cents per day.
For combined residential and business connections (K1 and K2 tariffs) it is $1.95 cents per day.
* Information is correct as of July 2023 but subject to change
How do energy retailers decide how much to charge for electricity supply?
The daily supply charge is the cost you pay to your energy retailer to be connected to the electricity grid. In turn, your energy retailer has to pay the energy generators for supplying the electricity and to maintain the electricity network.
Energy retailers calculate the supply charge based on several factors, including:
1.Network costs: A significant portion of the supply charge goes towards covering the costs of maintaining and operating the electricity distribution network. This includes expenses related to building and maintaining power lines, poles, and all the other infrastructure required to deliver electricity to your home or business.
2. Operational expenses: Retailers also consider their operational costs, such as customer service, billing, and administrative expenses, which are necessary to manage the supply of electricity and maintain customer accounts.
3. Regulatory charges: Supply charges also cover the cost of regulatory fees and charges imposed by government authorities or industry regulators, which retailers pass on to consumers.
4. Environmental obligations: Part of the supply charge is allocated to meet environmental obligations, such as supporting carbon neutral or renewable energy schemes, or complying with other government environmental regulations.
How can I reduce the supply charge I pay for my electricity?
To reduce the supply charge you pay for electricity, the only way to do this is to shop around and compare different electricity plans from various retailers. This assumes you live in an area where you do have a choice about your electricity provider!
Using Savvy's free comparison service, you can easily compare plans from different energy retailers to find a plan with the lowest supply charge that fits your needs. With the average price of electricity in Australia increasing by double-digit figures in 2023, comparing plans to find the best deal is now more important than ever.
However, when comparing plans, consider not only the supply charge, but also other variables of the plan, such as usage charges and any discounts offered. Look for plans that offer competitive rates and other popular benefits, such as pay-on-time discounts, bundling discounts, or green energy options. Additionally, be aware of any contract terms and conditions including exit fees and benefit periods which could impact your overall savings.
By being proactive in comparing electricity plans and switching to a more cost-effective retailer, you can potentially reduce the supply charge you pay and therefore the overall cost of your electricity bill.
Helpful energy guides
Compare energy plans
Disclaimer:
Savvy is partnered with Econnex Comparison (CIMET Sales Pty Ltd, ABN 72 620 395 726) to provide readers with a variety of energy plans to compare. We do not compare all retailers in the market, or all plans offered by all retailers. Savvy earns a commission from Econnex each time a customer buys an energy plan via our website. We don’t arrange for products to be purchased directly, as all purchases are conducted via Econnex.
Any advice presented above is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an energy plan. For further information on the variety of energy plans compared by Econnex, or how their business works, you can visit their website.