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Take charge of your power bill

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State Government Victoria

Generators, distributors and retailers

The light switch in your home is a long way from the power generating plant. By understanding who does what in delivering power to your household, you can better understand your rights as a consumer, and negotiate the contract that is best for you.

How does my power get to me?

There are three distinct businesses involved in delivering power to you − generators, distributors and retailers.

Generators produce electricity from coal and other sources such as the sun or wind. They sell electricity at wholesale rates to retailers.

Generators are responsible for the investment and operating costs required to build and run electricity generators. They also have to comply with government policies and regulation.

Distributors own power infrastructure and networks. They own the poles and wires that deliver electricity to you, and the meters that are on your property. Distributors fix faults outside your property like blackouts and damaged electricity lines.

For contacts see: Power distributors – infrastructure and power outages 

Retailers buy the electricity from generators and sell it to you. Just as different shops have different deals on the same goods, so too do electricity retailers.  Changing retailer will not affect the reliability or the quality of your supply.

Retailers operate customer service centres and provide direct services to households. They have to comply with government legislation including minimum service provisions.

For contacts see: Energy retail companies

Who pays their costs?

The money we pay for our electricity service is allocated towards the costs of generators, distributor's networks and retailers.

How the average customer's bill payment is allocated to cover costs for their electricity service.

Retail costs contribute 28% to an average customer's bill, distributor’s network costs 34% and generator costs 38%. Inclusions: Retail costs include Small-scale Renewable Energy Target and Large-scale Renewable Energy Target. Generator costs include wholesale costs 27.65% and carbon tax 9.9%. Network costs include transmission, premium feed-in tariff, distribution and metering.

Sources: Australian Energy Market Commission 2012-13 forecasts, Australian Federal Treasury Modelling Report 2011.

Who sets the price for electricity?

Each retailer sets their own prices. This is why you can search out the retailer who has the best deal for you and your household. The Victorian Government stopped setting prices from 1 January 2009, and made a law for retailers to publish their prices for everyone to see.

Notes on Who pays their costs?

Retail costs:

* Small-scale Renewable Energy Target (SRES): A Federal Government scheme that legislates demand for Small-scale Technology Certificates (STCs) which are created for eligible small-scale installations such as solar water heaters, heat pumps, solar panel systems, small-scale wind systems, or small-scale hydro systems  according to the amount of electricity they produce or displace. Renewable Energy Target (RET) Liable entities (usually electricity retailers) have a legal requirement to buy STCs and surrender them on an quarterly basis.

Large-scale Renewable Energy Target (LRET): A federal government scheme which legislates demand for Large-scale Generation Certificates (LGCs). LGCs are created based on the amount of eligible renewable electricity produced by power stations. LGCs can be sold or traded to liable to entities, in addition to the power station’s sale of electricity to the grid. RET Liable entities (usually electricity retailers) have a legal obligation to buy LGCs and surrender them to the Clean Energy Regulator on an annual basis.

Distributor’s network costs:

Premium Feed-in Tariff: A Victorian scheme that offered eligible households, businesses and community organisations with small-scale solar systems of five 5 kilowatts or less a credit of at least 60 cents per kilowatt hour for excess electricity fed back into the grid.