An interesting look at how the electricity system works
Our homes are a long way from power-generating plants but by understanding the electricity system, you can better understand your electricity bill.
How does the power get to your house?
There are three businesses involved in getting the power to your house.
Generators
Generators produce electricity from sources like coal and natural gas (and others such as sun or wind). They are responsible for electricity power stations and sell electricity at wholesale prices to retailers.
Distributors
Distributors or networks own the poles and wires that deliver electricity to your home. They are responsible for fixing faults like blackouts and damaged electricity lines.
Retailers
Retailers buy electricity from generators and then sell it to you.
Who pays for the costs of generators, poles and wire?
Your electricity bill is allocated towards the costs of generators, distributor’s network and retailers.
A breakdown of a typical bill would be around 24 per cent for generators, 55 per cent for the distributors and 21 per cent retail costs.
Who sets the price for electricity?
The price you pay for your energy service includes the tariff and any other fees and charges that may apply under your contract.
According to the government’s Australian Energy Regulator, some retailers have offers or tariffs that are “regulated,” which means the price is set by government. In Queensland, New South Wales, the ACT and Tasmania, you can ask for a contract with a regulated electricity price. Regulated prices for gas are only available in New South Wales. In Victoria and South Australia, there are no regulated offers or tariffs (for electricity or gas), which means that energy retailers set all of their own prices.
Related links:
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