Electricity bills explained
How do I read my power bill?
Power bills vary depending upon the retailer that you have chosen. Look for the detailed charges section, which is usually found on the reverse side of your bill. There you can locate the usage summary of kWh. If you’re still having trouble finding the average kWh usage, call your electricity retailer for help.
Having a better understanding of what makes up your overall power bill can also help you make savings.
For a more detailed explanation of electricity bills, take a look at this sample bill example.
What exactly does it all mean?
If you want to understand exactly what is on your individual bill you will need to visit your electricity retailer’s website, but a few general rules apply.
- Average cost per day: This is how much you pay each day on average for energy.
- Average daily usage: This is how much power you use each day on average. It is measured in kilowatt hours (kWh).
- What is a kWh? Electricity energy consumption is measured in kilowatt hours. A kilowatt (kW) is 1,000 watts of electrical power. For example if you run a 1,000 watt heater for one hour, it will use 1 kWh.
- Charge/kWh: Electricity usage is priced in cents per kilowatt hour, for example 22.56 cents per kilowatt-hour (c/kWh). So if you use 20 kWh each day, it would cost $4.51 each day.
- Peak and off-peak: If you choose a flexible pricing / time-of-use electricity plan, there can be different charges for peak and off-peak use.
How is electricity measured?
There are a couple of different ways to measure electricity energy usage, but the main one is the watt-hour. The watt (W) is a measure of electrical power. Light bulbs are marked with a watt rating, such as 40 W, and so are appliances such as air-blow heaters (around 1,000 W). This gives an indication of the amount of electrical power they need in order to work.
Electricity energy consumption is a combination of the power rating (that is, the number of watts) and the period of time for which it is used. So a standard measure of electricity consumption is the amount of watts used over an hour: the watt-hour (Wh). For example, a 40 W light bulb turned on for one hour will use 40 Wh of electricity. Similarly, a 4,000 W air-conditioner used for one hour will have used 4,000 Wh of electricity. In other words, using an 4,000 W air-conditioner for one hour will consume 4 kWh of electricity. A kilowatt-hour is simply a thousand watt-hours. In the case of the air-conditioner example, 4 kWh = 4,000 Wh.
An electricity bill records the total number of kilowatt-hours (kWh) consumed over a period, which is usually around three months.
Your tariff options
Homes or businesses are charged for electricity on the basis of a ‘tariff’. Tariffs determine how much, or the rate, the user pays for electricity used as well any other charges, including fixed charges. The rates are recorded on the electricity bill in cents per kilowatt-hour (c/kWh).
Three common types of tariffs offered by electricity retailers are:
- Flat rate: This is the most common type. The same rate is charged for electricity consumed all day.
- Time-of-use: This is where a different price is charged according to when the electricity is used during the day. Time-of-use tariffs usually involve peak and off-peak pricing, which means users are charged less for electricity during ‘off-peak’ or low demand periods and a higher rate for electricity used during high demand or ‘peak’ hours.
- Flexible electricity pricing: Flexible electricity pricing refers to the new electricity plans that include peak, shoulder and off-peak ‘time-of-use’ rates.
These flexible electricity pricing plans have new customer protections associated with them.
While there are current peak / off peak or time-of-use plans that have been available for some years, and will continue to be offered by electricity retailers, it is only the new flexible pricing plans that will have these new consumers protections associated with them.