Who sets electricity prices?
Your electricity prices are set by two independent bodies. The Australian Energy Regulator (AER) sets the part of your bill that covers the network component and the Independent Pricing and Regulatory Tribunal (IPART) sets the part of your bill that covers the cost of generating power and other retail services like billing and call centre costs.
When are prices going to be determined?
Ausgrid submits our proposed network prices to the AER in early May, after which they consider our proposal. The AER is expected to make its final determination on June 1 for network prices. IPART will then make its final determination for your retail electricity prices, which includes these network charges, by July 1.
How much have prices increased?
Ausgrid runs your electricity network and so prices for this part of your bill are determined by the AER. It is estimated that the network portion of your bill will increase by about 11 per cent from July 1. It means that about half of your electricity bill will go towards the costs of running a safe and reliable electricity network.
Where does this money go?
Your electricity bill is helping to pay for the upgrade of the electricity network to keep it safe and reliable.
This money helps maintain the poles, wires and substations that transport electricity from the power station to your home. The Ausgrid network is made up about 50,000 km of underground and overhead power lines, 30,000 small and large substations and 500,000 power poles. Much of this equipment was built in the 1960s and 1970s and it’s now time for it to be replaced.
Our electricity network must also be maintained to provide power at high use times called ‘peak periods’. And there are also state government standards that set out criteria for the performance of the electricity network.
Why are prices so high?
Recent electricity price increases have been driven by the need to upgrade the electricity network to make it safe and reliable, government green schemes and other retail costs (see the IPART chart below which explains other costs).
IPART estimates that a residential customer living in the Ausgrid network area with average electricity usage will be paying about $2,101 a year if they are on the regulated rate.
Why are prices different in other network areas?
Costs vary between regions that are supplied by different electricity networks. For example, in country areas it can cost a lot more to transport electricity across long sparsely populated areas covered in bush or crossing rivers or mountainous areas. Other factors that affect network costs include the age of electrical equipment, how much power is being used particularly in peak periods, demand for new connections and reliability and safety requirements.
These factors have to be taken into account when comparing the network prices of different distributors.
For example, Ausgrid has one of the oldest electricity networks with 35% of its assets over their standard life. This is very different from Victorian distributors, with only 3% of their assets over their standard life.
What assistance is available to help me pay my bill?
From 1 July 2012 the NSW Government is introducing a $75 Family Energy Rebate, rising to $150 by 1 July 2014. The Low Income Household Rebate will also increase to $215 from 1 July 2012, rising to $235 by 1 July 2014.
From 1 July 2012 households eligible for both rebates will receive a maximum of $250.
Other assistance measures include the Medical Energy Rebate, Life Support Rebate, Home Power Savings Program, free financial counselling and Energy Accounts Payment Assistance (EAPA) vouchers. Centrepay is also available to prevent large energy bills by making regular instalments.
More information on electricity rebates and EAPA is available from your electricity retailer or from the Energy Information Line on 1300 136 888.
For more information on rebates, hardship programs and payment plans contact your retailer, who can assist and/or refer you to the relevant agency.
How can I reduce my electricity usage and bills?
There are a number of steps you can take to reduce your energy usage at home or at work.
Visit the Ways to Save section of Ausgrid’s website for useful tips and tools to help you better understand where your energy goes and choose energy saving actions that will make the biggest impact on your bills.
Why don’t you reduce demand for electricity rather than building more infrastructure?
In some cases, it may be more cost-effective to reduce peak demand for electricity than to invest in infrastructure that is only used for a few days each year.
Before undertaking any major capital programs, Ausgrid conducts an investigation to see if there are more innovative and less expensive alternatives to building more network infrastructure.
At the moment, the majority of Ausgrid’s capital investment is to replace ageing electricity assets so we can continue to provide a reliable and safe electricity supply.
Ausgrid has also been a major supporter of a review by the Australian Energy Market Commission to provide greater incentives to promote more demand management. You can find details of that review here.
What is time of use pricing?
Customers with advanced meters and time of use tariffs pay different amounts for their electricity over three different time periods – Peak, Shoulder and Off Peak.
Prices are cheaper in Off Peak and Shoulder periods – that’s 82% of the time (there is no peak period on weekends and public holidays), and more expensive during peak periods.
Most households already use around 78% of their electricity during Shoulder and Off Peak periods.
Remember that electricity use varies from household to household and from season to season, particularly when large appliances such as air conditioners, portable heaters, swimming pool pumps and clothes dryers are used.
Am I better off on time of use?
Most customers in Ausgrid’s network area are better off on time of use pricing, however you need to check with your electricity retailer to see what prices they offer. Our analysis of network prices show that about 97% of residential and business customers would be better off on time of use pricing, compared to the standard rates.
Ausgrid has a time of use comparison calculator on its website so you can find out if you would pay more or less on regulated time of use rates. If you do not have an interval meter, there is a guide on the website to help estimate how much electricity you may be using in the different time bands.
What is a service availability charge?
The service availability charge is a fixed part of your electricity bill that helps cover the costs of running your electricity service. Your water and gas bills also include a fixed component. The fixed component of the Ausgrid bill is less compared to both water and gas in our network area.