November 23, 2017

What Makes Up the Cost of Your Electricity Bill?

We pay for our water and electricity consumption on a regular basis, but did you ever take time to check what you’re actually paying for? All those figures represent different items that make up our electricity bill. Understandably, we tend to look at the total amount so we can get the bills payment over with and move on with our other household tasks.

National Energy Customer Framework

Your electricity bill is likewise affected by where you live in the country. There are laws on general consumer protection as well as state and territory energy under the National Energy Customer Framework.

Every household has different levels of energy consumption. Each has a different set of appliances and gadgets that use varying levels of electricity. The price you pay for your electricity bill depends on several other factors.

Here are the different items that make up the cost of your electricity bill:

  1. Generation costs are for creating electricity at a power station.
  2. Transmission costs are for setting up and maintaining the state’s network of high voltage powerline infrastructure.
  3. Distribution costs are incurred for building and maintaining the network of low-voltage poles and wires which send electricity to homes and establishments.
  4. Retail costs are incurred for connecting and billing customers. The expense in managing their accounts also falls under retail costs.
  5. Green scheme costs are associated with the Commonwealth Government’s Renewable Energy Target.
  6. Metering costs are expenses associated with your metering equipment. This covers maintenance and meter reading.

Take note that generation and retail costs are determined in competitive markets wherein companies offer cheaper products to get customers. Also, independent regulators are the ones responsible for the network costs.

Your electricity bill is likewise affected by where you live in the country. There are laws on general consumer protection as well as state and territory energy under the National Energy Customer Framework. This operates in all states and territories, excluding Victoria, Northern Territory, and Western Australia.

Why is it important to know what you’re paying for? Most of us just pay the electricity bill without looking at the different elements involved. Understanding your electricity bill will greatly help you in saving money in energy consumption. You can devise a strategy on how to keep your energy costs down and see if it is effective. You can replace incandescent bulbs with LED lighting, unplug all unused appliances and devices, and buy energy-saving gadgets. You can also check your electricity bills from the last few months or so to see which months posted higher amounts, then make the necessary changes to save money.

Got tips on how to save money on electricity bills? Share your ideas in the comments section.

About the author  ⁄ Marxa Dillan

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