For those running a small or medium enterprise (SME), electricity use can be a major operating cost. To help you see how your business's power use and bills stack up against others in your state or Australia, we've gone through and analysed the data from the ACCC's September 2020 Inquiry into the National Electricity Market report.
All the data in this report was collected in the third quarter of 2018 and 2019. Note that the majority of the report deals with median values – the middle value of each data set – instead of the average value. This is designed to help cancel out any outliers.
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The median quarterly bill is the value that falls right in the middle when we look at all the bills for SMEs, sorted by state. Here, we've compared median bills of businesses on market offers to those on standing offers.
For more on the difference between market and standing offers, see our guide.
Bills for small and medium businesses on market offers generally dropped by about 1.5% between 2018 and 2019.
While standing offer customers look to have paid far less overall than market offer customers, this is entirely due to the fact that standing offer customers used significantly less power than those on market offers, leading to these smaller bills. Prices on standing offers remained higher overall, as shown in the next section.
Usage costs are how much you pay for each unit of energy consumed, measured in c/kWh (cents per kilowatt hour). Once again, we've compared median usage rates for businesses on market versus standing offers.
Median usage cost
Standing offer customers paid an average of $424 extra/yr vs market offer customers
Standing offer customers paid an average of $424 extra per year compared to market offer customers.
Besides usage rates, the other major factor that determines your business's energy bill is how much power it's using. We've compared median power usage in kWh for businesses on market versus standing offers.
Standing offer customers used significantly less power than those on market offers, in some cases consuming half or less the amount of power. This led to the lower overall power bills seen in the first section.
On average, SMEs are paying less in 2019 compared to the previous year, with standing rate customers paying almost 15% less and market rate customers paying 6% less.
Market rate customers are paying
Standing rate customers are paying
Usage rates for SMEs dropped by around 3.5c/kWh for standing offer customers, and 0.5c/kWh for market offer customers, consistent with the overall lower energy bills.
Usage rate change
In 2019, Market rate SMEs are paying
In 2019, Standing rate SMEs are paying
There are two types of discounts:
- Guaranteed discounts, which apply to your usage rates or total bill no matter what, for a certain period of time.
- Conditional discounts, which only apply so long as you're meeting a particular condition, such as paying your bill on time or paying via direct debit.
This chart shows what percentage of market offer business customers were on plans with conditional discounts in particular in 2018 and 2019.
The fraction of SMEs on conditional discounts increased in every region except NSW, showing that they were still perceiving value in conditional discounts. This coincided with a reduction in conditional discount advertising due to changes in legislation.
There are four main types of tariffs we consider here:
- Flat tariff. All energy use is billed at the same rate, no matter when it is used.
- Time of use tariff. Energy use is billed differently depending on time of day, divided into peak (high rate), off-peak (low rate), and possibly shoulder (medium rate) periods.
- Controlled load (CL). A dedicated circuit for a high-demand appliance, like an electric hot water heater or underfloor heating. Can be combined with flat or time of use tariffs.
- Demand. Customers are charged both for their peak demand on the network, plus how much power they use. Generally for larger businesses.
The pictograph below illustrates the percentage of SMEs on each tariff in 2019, by state or region.
In the table above, we've excluded SMEs on other tariffs than the four listed, since they made up less than 0.4% of customers in all cases.
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