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What is a kilowatt hour (kWh)?
Every time you watch a show on Netflix or switch on a lightbulb, you're consuming electricity. Energy companies charge "usage rates" per unit of power you use, measured in kilowatt-hours (kWh). These rates are determined by several different factors, but rarely are lower than 23c/kWh or higher than 40c/kWh.
In this guide, we'll take a look at what kind of usage rates are reasonable, how they're calculated and how you might get a better deal.
What's in this guide?
- What is a kilowatt hour (kWh)?
- Average electricity cost per kWh (state-by-state breakdown)
- Average electricity bills in Australia
- What do kWh's look like when it comes to actually paying your bill?
- Average kWh usage based on your household
- Will kWh always stay the same? Don't just look at the rate
- Where can I find my own costs per kWh?
- How are electricity rates set?
- When can electricity prices change?
- How can I find the best kWh rates?
Average electricity cost per kWh (state-by-state breakdown)
Unsurprisingly, electricity rates are not consistent across Australia. Different states or parts of states have their own laws, regulations and power distribution situations, meaning that prices vary widely from New South Wales to Queensland, for example.
The following table contains the average cost of power in c/kWh for four states that have similar regulations. It's based on the main market offers of six providers: AGL, Origin, EnergyAustralia, Red Energy, Click Energy and Alinta Energy.
|State||Average usage rates (c/kWh)|
|New South Wales (postcode: 2000)||24.68|
|Victoria (postcode: 3000)||22.91|
|Queensland (postcode: 4000)||21.68|
|South Australia (postcode: 5000)||35.25|
Average rates based on single rate tariffs. Average rates calculation includes discounts that may expire. Numbers last checked April 2020.
South Australia stands out as more expensive on average
According to these numbers, South Australians have to pay significantly more than residents of any other state, while Victorians and New South Wales residents are luckier. Remember that while usage rates are a major part of your bill, they're not the only part.
You're also billed a supply charge for each day you're connected, even if you use no electricity. While low usage rates are usually associated with similarly low supply rates, make sure you're not getting cheated on one while the other is kept down.
Average electricity bills in Australia
According Finder's Consumer Sentiment Tracker, the average quarterly electricity bill in Australia is around $364. Of the three state's where we had the most respondents, here are each of their average bills:
|State||Average quarterly billⓘ||Annual bill|
|New South Wales||$353||$1,414|
What do kWh's look like when it comes to actually paying your bill?
Your bill will usually show you a total cost ($) for a certain bill period (usually quarterly or monthly).
Most of these items you can find on the front of your bill (see below).
Note: Your total cost is impacted by your:
- kWh usage
- Daily supply charge
Average kWh usage based on your household
You'll also be able to compare your household usage against a benchmark at the front of your bill.
Will kWh always stay the same? Don't just look at the rate
The values in the table above are only for single rate tariffs and are averages of rates on marked offers. There are two main factors that affect your final usage rates.
- Single rate. The most common tariff, where you're charged one rate for ball the power you use, no matter when you use it.
- Time of use. This splits power use into peak and off-peak periods with different rates. Peak rates are usually higher than the single rate, while off-peak rates are lower. Peak periods tend to be from about 2pm–8pm, every weekday.
- Controlled load. This applies to a single heavy-use appliance, like a pool pump or water heater. Controlled load rates are usually much cheaper in exchange for only being supplied for a set number of hours per day.
Discounts muddy the waters further. A plan may have higher base usage rates than another, but still work out cheaper thanks to a discount being applied. Guaranteed discounts apply no matter what you do, while conditional ones require you to satisfy a condition.
Almost all discounts have an expiry period, so your rates may jump back up when they run out. In addition, some discounts only apply to usage rates, while others will apply to both supply and usage. Be careful about the terms of a discount when buying a plan.
Where can I find my own costs per kWh?
You can find out what you're actually paying for electricity by taking a look at your power bill. Somewhere on your bill there will be a table that breaks down your power use into pieces. In the example of a real bill from Energy Australia, the power usage breakdown can be found on the second page.
Each row contains different cost types, for example "peak" and "off-peak" for time of use tariffs or simply "peak" for a single rate. You should have a column that contains how much power you used (in kWh), the price per unit (in c/kWh) and the total cost (the previous two values multiplied together).
Providers are also required to show you how your power usage compares to other average households in your area of various sizes.
Want a better way to track your bills?
The Finder app helps you track your bills so you don't get any nasty surprises come payday. We'll also see if we can find you a better deal so you can save some cash too. Pop in your phone number below to get your download link.
How are electricity rates set?
In some places, like Queensland outside the South East or rural Western Australia, power prices are regulated, meaning the government sets them. However, in places like South Australia, New South Wales, Victoria, South East Queensland, Australian Capital Territory and Tasmania, the market is deregulated, meaning that prices are set by private energy companies.
Essentially, power is sold from a distributor to energy companies at a wholesale rate which they sell on to consumers at a rate they decide. Some power companies, like Amber Electric, allow customers to buy power directly at wholesale rates.
When can electricity prices change?
Wholesale prices themselves change every 30 minutes, but retailers don't update their rates nearly so often. The frequency that they're allowed to do so depends on what type of contract you're on:
- Standing offer. This is a type of default contract you'll be placed on if you don't purchase any particular retailer's plan or explicitly purchase a standing offer plan. On a standing offer, your rates can't legally be changed more than once every six months.
- Market offer – variable rate. If you buy a variable rate plan from a retailer, it can technically change the rates as often as it wants, so long as it lets you know. In reality, retailers rarely update their rates much more than once per year.
- Market offer – fixed rate. Certain energy plans promise fixed usage rates for a certain period that's set at purchase. In this case, rates can't be changed until the benefit period expires, usually a year.
How can I find the best kWh rates?
As covered in this article, flat usage rates are one of the most important factors in determining how cheap a plan really is. However, things like discounts, contract terms and other considerations can matter, too.
The best way to find plans with good rates is to use our comparison tool or to check out our state guides.
- New South Wales
- South Australia
- Australian Capital Territory
- Western Australia
- Northern Territory
Important notes: The estimated price we show by default is based on a single rate tariff. On your bill this might be known as a 'peak tariff', 'peak only' or an 'anytime tariff'. There are other tariff types available to customers and you may need to contact your provider if you are on these tariffs:
- Single rate with a controlled load
- Time of use
- Time of use with a controlled load
The price estimate should not be used as an official quote, but an indication of what your costs may be on the plan. It varies based on whether you provide us with your bill details. You can learn more here.
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