Knowing the range of tariffs and fees placed on energy can inform you to make better decisions when selecting a provider.
The bulk of your energy bill is determined by one tariff, fee, or another.
By understanding what types of tariffs apply to you, where they arise from and why, you can get to know your bill and become familiar with the system that serves up your power.
Where are they shown on my bill?
On your bill, where there is information about ‘how much energy you used’ and ‘how much it costs’, there should be tariff rates and further information.
There may also be information about how your final bill was calculated. Here there may be ‘usage and supply charges’ — these are tariffs.
Tariffs are prices set on your energy as it’s provided to ensure that the providers are making their money back. There are tariffs that apply to the inherent cost of electricity and delivering that electricity, and there are tariffs that apply to how much of that electricity you use. Customers who don’t have the option to switch providers or who are on a default, standard retail contract will likely only pay basic fixed and consumptive tariffs (read on below).
What are the different types of tariffs?
- Fixed or basic charge: This tariff is there to make sure that each link in the energy chain — from generation to light switch — is kept alive and functioning. Once generated, electricity must be transported and converted many times along an intricate infrastructure of power poles, wires, transformers, substations, and more. This infrastructure must be maintained and administered to, which requires bottom-end funding at the end of the chain: and that means you. The other names of the tariff also provide clues to its purpose: ‘service charge’, ‘daily supply charge’, or ‘service availability charge’.
- Variable/consumption charge: These tariffs, also known as ‘usage’ or ‘consumption’ charges, are the amount you are charged per unit of energy, whether kilowatt hours (kWh) for electricity or megajoules (MJ) for gas. You can find the cost of these tariffs, for your area, online. The rates for these charges are established yearly.
- Stepped-rate or blocked tariff: These tariffs step up in their cost once you pass a certain threshold of kWh or MJ usage. Depending on the specifics of the deal, the costs on the subsequent usage thresholds may even go down past certain points.
- Time-of-use: Depending on your contract, your tariff rates might change based on your energy usage, they might be bound to different thresholds of kWh or MJ use. These rates also change depending on the time of day: peak, off-peak, shoulder, or other time scale such as by the weekend, or change of season.
- A feed-in tariff: This is the rate of money you get from committing electricity to the grid from your solar panel setup. Currently, retailers in Victoria pay roughly 6.2 cents per kilowatt hour, New South Wales between 5.1— 8.0 cents, Australian Capital Territory between 6.0—7.5 cents, Queensland 6.0—12 cents, Tasmania 5.55 cents, South Australia 5.3 cents, Northern Territory pays the same feed-in as the consumption rate, and Western Australia has a variable rate
Who sets and regulates tariffs?
Gas and electricity tariffs, as well as those for other services such as transport, are regulated by The Independent Pricing and Regulatory Tribunal (IPART). IPART is open to any and all groups to submit recommendations for the pricing of utilities including consumer groups and energy suppliers.
State-based ombudsmen are not responsible for investigating tariff fluctuations or price hikes to energy charges, but they are responsible for ensuring that these tariffs are applied accurately to customers usage and therefore, charge.Back to top
What other types of fees are there?
- Establishment fee: This is often paid to set up your connection in the initial stages.
- Early exit fee: Some contracts make explicit mention of having no early exit fees. This a flat fee that must be paid if you leave your contract earlier than agreed upon. These can cost anywhere between $40—$100.
- Late-payment fees: Paying your bill late or not having sufficient funds for a direct debit can result in extra charges on your next bill.