The rise and fall of domestic power bills

As every Aussie householder has experienced, power bills have risen and risen over the past ten years. But finally, domestic power bills are starting to fall, and this will be by an average of 1.1 per cent between 2018-19 and 2020-2021, according to the Clean Energy Council.

To help you better understand these escalating bills, and to give you some hope of a lower-cost energy future, let’s take a look at what these bills are made up of, and which cost components have contributed most to the rises. Let’s also take a look at what is being done to relieve some of the burden for consumers into the future.

Cost components of power bills.

Your power bill is made up of the following costs:

– 39% of your bill is the cost of actually generating the electricity, whether from renewable energy or fossil fuels. This is ‘wholesale power’. The rising cost of producing power from gas, and the closure of several old and inefficient coal power plants in South Australia and Victoria has caused the wholesale price of power to rise in recent years. However, the Clean Energy Council says the wholesale electricity price is expected to decrease by an annual average of 5.1 per cent from 2018-19 to 2020-21 as more than 4500 MW of new large-scale renewable energy generation enters the market to ease supply-side pressures.

– 44% of your bill is the cost of the poles and wires that carry the electricity from power plants to your home or business. It is not cheap to keep the poles and wires well maintained and to build new parts of the electricity network when required.

– a third component of your power bill is the cost of the electricity company’s administration and marketing, and this component has been one of the biggest causes of recent price rises. It covers the cost of maintaining customer databases and billing processes at electricity retail companies, as well as marketing to win new customers. These costs were found to have accounted for anything between 12%-25% of the average electricity bill.

– the last component of your bill covers environmental costs, which includes the cost of meeting the national Renewable Energy Target, as well as the ongoing costs of rooftop solar power support schemes. This cost varies from state to state.

Bringing prices down.

The Clean Energy Council offers consumers hope by explaining that some price relief is on the way with prices expected to fall by an average of 1.1 per cent between 2018-19 and 2020-21. Renewable energy will play a role.

There’s been an unprecedented increase in the amount of renewable energy projects and investment in Australia over the last year or two, and this will add more supply to the electricity system, and reduce the strain caused by the closures of coal plants.

Government can take advice on clean and reliable solutions to the problem of fossil fuel based power plants that are contributing to climate change, and keeping electricity prices hiked. With long-term and effective energy policy that prioritises building renewable energy and energy storage capacity, consumers and businesses can at long last look to a future of sustainable energy and sustainable prices.

In the meantime…

Until energy policies that contain great incentives for consumers and businesses to invest in a renewable future are rolled out, there are things that you can do now to keep your power bills down.

The Clean Energy Council says the best thing we can do to combat rising electricity prices is to reduce or better manage ‘peak demand’. Peak demand refers to the small number of times each year when very high amounts of electricity are used – usually the hottest few days of summer. As we consume more and more power by building more houses and installing more air-conditioners, the demand for electricity on these very hot days goes up. This means we need to build more power plants to avoid blackouts, and this is the most expensive way to deal with the issue, and these high costs are passed on to the consumer.

One solution is to manage this peak demand by implementing a power demand strategy.

What Energy Partners can do for you?

This is where our expertise at Energy Partners comes in. We can guide you through ‘smart’ power demand management of your home or business.

Let us take you through your power bills to see what you use and when. We’ll analyse your energy needs and match them with cheaper and cleaner solutions, such as implementing energy efficiency measures to help reduce peak demand, changing your tariff structure, installing solar, or providing energy storage systems. The increasing uptake of rooftop solar panels is already playing a major role in managing peak demand on hot summer days.