Making sense of your electricity bill

Baffled by your electricity bill? We unpack the jargon so you can understand your usage and costs – and perhaps reduce them.

Electricity bills are notoriously difficult to decipher, and many of us choose simply to pay them rather than read them in detail. “But understanding your bill is critical to making good decisions about energy,” says Energy Consumers Australia chief executive Rosemary Sinclair.

According to research conducted by Sinclair’s organisation, NSW consumers are eager to make their own choices about electricity.

At the City of Sydney, we understand that you want better information and tools to help you do this, which is why we’ve compiled this overview of the information and terms commonly included in electricity bills.

6 Tariff
In the context of electricity bills, “tariff” means the rate you pay for energy.

7 Kilowatt hour or kWh
A measurement of how much energy you use. One kilowatt hour is the amount of energy a 1000-watt appliance uses if it runs for an hour. For example, a 100-watt lightbulb would take 10 hours to use one kWh of electricity.

8 Peak
The amount of electricity you used during periods of high demand; generally 2pm-10pm weekdays.

9 Off peak
The amount of electricity you used during periods of low demand; generally 10pm-7am weekdays.

10 Shoulder
The amount of electricity you used during periods of moderate demand; generally 7am-2pm and 8pm-10pm weekdays.

11 Network charges
A fixed daily fee for the supply of electricity to your premises – this is usually half or more of a typical bill.

12 Solar feed-in tariff
A payment you can receive for the excess electricity produced by your solar system, which is fed back into the grid.

13 Discounts
Many retailers offer discounts on usage totals for consumers signed up to certain plans or promotions.

Components that make up an electricity bill

Regardless of your energy retailer, your bill will probably contain the following information:

Summary of charges

• Opening balance: The amount of money (if any) that you owe from your previous bill.

• Adjustments: Any fees or refunds applied to your account since your previous bill (for example, late-payment fees).

• Balance carried forward: The combined total of your Opening Balance and Adjustments balance.

• Current charges: Charges for your electricity usage during the most recent billing cycle.

• Total amount due: The combined total of your Balance Carried Forward and Current Charges.

“Consumption” or “usage”

Following the Summary of Charges is more detailed information about how much electricity you’ve used, described as “consumption” or “usage”. This information may be divided into the following categories:

• Peak: The amount of electricity you used during periods of high demand. Most energy retailers define peak as 2pm-8pm weekdays.

• Shoulder: The amount of electricity you used during periods of moderate demand. Generally 7am-2pm and 8pm-10pm weekdays

• Off-peak: The amount of electricity you used during periods of low demand. Off peak rates operate from 10pm-7am weekdays.

Weekend rates are either shoulder or off-peak.

Also listed in this section are:

• Supply charge: A fixed daily fee for the supply of electricity to your premises. This is your share of the total cost of operating the electricity network.

• Discounts: Many retailers offer discounts on usage totals for consumers signed up to certain plans or promotions.

What about the “demand charge”?

A demand charge is a daily charge based not on how long you use an appliance but on the load that appliance or combination of appliances incurs – even if it’s over a short period of time. So, if you occasionally use a large amount of power by running various machines or appliances simultaneously, rather than consistently using a moderate amount of power, your demand charge will be higher.

“Demand is measured by how much you use at once – how many appliances are on – which is different to how much you have used in total,” Sinclair explains. “A good rule of thumb is to think first before running all your appliances at the same time.” Installing solar is also a good way to reduce your maximum demand.

Until recently, demand charges (also known as “capacity charges”) only applied to businesses using commercial quantities of electricity. But new retail pricing plans in NSW from 1 July 2019 mean City of Sydney residents who move into a new home, or whose meter fails and needs to be replaced, will also be liable for the charge.

Understanding electricity jargon

You might see the following terms on your bill:

• Time of use: A term used to describe the peak/off-peak fee structure (that is, charging different amounts for electricity use at different times).

• Tariff: In the context of electricity bills, “tariff” means the rate you pay for energy.

• Kilowatt hour or kWh: A measurement of how much energy you use. One kilowatt hour is the amount of energy a 1000-watt appliance uses if it runs for an hour. For example, a 100-watt lightbulb would take 10 hours to use one kWh of electricity.