A lot goes on behind the scenes in the world of electricity to ensure your lights at home turn on every day. To help you learn about the factors that can cause your energy prices to change, here’s a simple and informative summary for our customers on the Ausgrid, Endeavour, Essential, South Australia Power Network and Energex networks.
Once a year, energy retailers update the rates you pay on your electricity bill. That’s because every year, those in the energy supply chain review their wholesale, network, and environmental costs and decide what to charge energy retailers. We update our prices to reflect these changes in external costs.
While we hope these changes mean we can reduce your prices, sometimes market conditions will result in an increase. The impact on you is also dependent on your usage, network, and other factors.
Here are the main underlying costs that make up energy prices and can cause them to change:
- Distribution & network: Associated with the maintenance of power infrastructure, such as poles and wires, necessary to supply you with electricity. This charged by local network service providers and vary greatly between region and tariff type. Distribution & network costs often depend on any upgrades or extensions that are required. Network costs have increased for FY21/22.
- Wholesale energy: This is the price of electricity at which retailers buy from a generator to supply to you. The cost of wholesale energy is determined by demand and the level of rooftop solar entering the grid. The more renewable power entering the grid the less wholesale energy is required, thus reducing demand and cost. As a result of continued solar uptake, wholesale costs have decreased for FY21/22.
- Solar: Lower wholesale prices reduce the cost of energy from the grid. However, it also means the value of exported solar falls in a similar way. We have worked hard to maintain as high a FiT as we possibly can.
- Environmental: The cost retailers must pay to comply with government environmental regulations and boost investment in renewable energy. Environmental costs have increased for FY21/22.
- Metering: Costs associated with accessing usage data from meters, charged by the metering provider or the Local Network Service Provider.
- The Government: All energy providers need to pay fees to fund the Government’s Renewable Energy Target and various energy efficiency programs.
- Debt management: Regulatory rules have exposed retailers to additional costs. When a customer doesn’t pay, we still need to pay 80-85% of that money to the parts of the supply chain listed above.