The network component of your electricity bill is regulated by the Australian Energy Regulator (AER). Each year, network providers must submit a list of proposed network tariffs that will apply for the next financial year, starting on 1 July.
Once approved, Ausgrid then provides its network prices to electricity retailers. The retailers incorporate those prices into the final retail tariffs that appear on a customer’s electricity bill. Retailers can choose how they pass on these network charges, taking into account their own pricing strategies and priorities. From 1 July 2014, retailer charges are no longer regulated by the Independent Pricing and Regulatory Tribunal.
Ausgrid typically submits our proposed network prices to the AER in May, after which they consider our proposal. The AER typically makes a decision on whether our proposed network prices are compliant with the National Electricity Rules and the Network Determination in June.
Energy retailers will then make their decision on your retail electricity prices, which includes these network charges, by 1 July of each year.
We are committed to delivering real reductions to network electricity bills for our customers by keeping average residential price increases below the Consumer Price Index. However, the overall change in a customer’s electricity bill may depend on a range of factors such as how much electricity is consumed and the final network and retail tariffs.
Your electricity bill is helping to pay for the safe and reliable operation and maintenance of the electricity network, including the poles, wires and substations that transport electricity from power stations to your home or business. Our network is made up of about 50,000 kilometres of underground and overhead power lines, 30,00 small and large substations and more than 500,000 power poles. Much of this equipment was built in the 1960s and 1970s and needs to be replaced to ensure your power supply remains safe and reliable. The electricity network must also be maintained to provide power at high use times called ‘peak periods’.
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 over long distances across bushland, rivers and mountains. Network costs can also be affected by the age of electrical equipment, how much power is used at 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.
There are a number of steps you can take to reduce your energy usage at home or at work. Visit your energy use on our website for useful tips and tools to help you understand where your energy goes and which actions will have the biggest impact on your bills.
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, we conduct an investigation to see if there are more innovative and less expensive alternatives to building more network infrastructure. At the moment, the majority of our capital investment will replace ageing electricity assets so we can continue to provide a reliable and safe electricity supply.
Customers on a time of use tariff pay different amounts for their electricity over three different time periods – Peak, Shoulder and Off Peak. Prices are more expensive during peak periods, and cheaper in Off Peak and Shoulder periods – that’s 83% of the time (there is no peak period on weekends and public holidays.) Most households already use around 79% of their electricity during Shoulder and Off Peak periods.