Understanding Your Bills
Energy bills consist of the following price components:
- cost of electricity (commodity price);
- network charges (the cost to transmit and distribute of electricity, from generators to wires to end-users);
- a retail margin (the on-sell cost from retailer to customer);
- government and market charges (e.g. AEMO charges)
- the costs of environmental schemes and other add-ons (National - LRET, SRES, State - VEET, ESS, GEC)
The bulk of your bill is made up of network charges and the commodity cost of electricity. Network charges continue to increase year-on-year to support upgrades to an ageing network infrastructure to meet demand across the NEM. Renewable energy charges have also increased and make up the environmental proportion of your bill.
National Metering Identifier (NMI) – is a ten-character unique identifier located on your electricity bill used to identify your supply point. The structure of the NMI consists of alphanumeric components that contain no spaces. Depending on your zone, the first 2 to 5 digits indentify the electricity network of you meter. Your NMI may also contain a checksum value as an eleventh digit.
Metering Installation Registration Number (MIRN) – is a ten-character unique identifier located on your gas bill used to identify your supply point. The structure of the MIRN consists of alphanumeric components that contain no spaces. In relation to the first characters 3 characters, the first digit identifies the energy category (5 signifies gas); the second digit represents the state; and the third digit denotes the distributor.
The actual commodity cost of electricity is just one element of your electricity bill. The majority of your bill is made up of other various charges from stakeholders in the supply chain. The overall cost of your electricity can be greatly affected by these charges. For example, while the commodity cost remains relatively competitive, maintenance on network infrastructure has seen bills dramatically increase as these charges are passed on from the retailer to the consumer.
Transmission Losses are incurred during the transport of electricity from the generator to the through poles and wires of the network.
Distribution Losses are incurred during the transport and delivery of electricity through a network’s poles and wires to the end user.
Renewable Energy Target (RETs) – The scheme requires 20% of Australia’s electricity to be produced from renewable energy sources by 2020. Australian electricity retailers and large wholesale purchasers of electricity must meet annual targets, creating a financial incentive for investment in renewable energy sources through the creation and sale of certificates. The scheme is split into two parts: the Large-scale Renewable Energy Target (LRET) and the Small-scale Renewable Energy Scheme (SRES). Energy users nationwide are subject to both charges.
Energy Savings Scheme (ESS) in New South Wales – Introduced 1 July 2009 by the NSW Government, the scheme encourages greater efficiency of electricity use in households, industry and commerce. Energy users in NSW are subject to this charge, itemised as “ESS” or “ESCs” on an unbundled bill.
The NSW Greenhouse Gas Abatement Certificates (NGACs) scheme ceased operation on 30 June 2012.
Gas Electricity Certificates (GEC) in Queensland – The Queensland Gas Scheme began in 2005 and was established to boost the state's gas industry and reduce greenhouse gas emissions. Under the scheme, Queensland electricity retailers and other liable parties are required to source a prescribed percentage (currently 15%) of their electricity from gas-fired generation. Energy users in Queensland are subject to this charge, itemised as “CEGs” on an unbundled bill.
Victorian Energy Efficiency Target (VEET) has been scheduled to close at the end of 2015 – The VEET scheme was designed to make energy efficiency improvements more affordable, contribute to the reduction of greenhouse gases, and encourage investment, employment and innovation in industries that supply energy efficiency goods and services. Energy users in Victoria are subject to this charge on both gas and electricity until the end of 2015.
The Victorian Government made certain large energy users exempt from paying VEET charges as they do not receive benefits from the VEET scheme, while they must also commit to energy efficiencies under the Environment and Resource Efficiency Plans (EREP) scheme.
Small and Large Users
Retailers normally have two categories for customers, based on the size of their usage and the tariff on which they are charged for energy.
Small to Medium Businesses (SME)
SME users are considered to use between 0-160MWh of electricity per year (0-100MWh in Queensland). Typical SME users include small businesses and residential homes. Such customers receive ‘bundled rates’ on their bills. These rates are inclusive of all components and pass-through charges, lacking an itemised detailed costing of each element. It is now possible in some areas for SME’s to aggregate their load and go to the market as one in order to achieve improved bargaining positions.
Large Contract Users/Commercial & Industrial (C&I)
C&I users consume anywhere upward of 160MWh+ per year (100MWh+ in Queensland). Such customers receive ‘unbundled rates’ on their bills. Each component is individually itemised to give a better indication of its proportion of the overall energy cost. This allows C&I customers to identify potential ways to lessen the impact of certain components, such as base commodity rates.
For further information regarding your bill, please visit your energy retailer’s billing page.