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What is my electricity bill paying for?

Electricity bills cover a number of costs 16000646 800467307 0 0 7054787 300

We all receive bills from our electricity suppliers, but it is rare for people to actually understand what the price they pay represents.

The cost of your bill is influenced by a number of things and is more than simply a cost for usage.

A report from the Energy Retailers Association of Australia gives a handy breakdown of the factors which determine how much you pay.

The wholesale cost of electricity production accounts for around 40 per cent of your total bill.

This electricity is generated at power plants and then bought by your supplier.

A suppliers distribution costs include the need to pay for the extensive wiring and cable systems that connect your home to the grid - these are roughly another 40 per cent of your total bill.

Retail costs amount to ten per cent and cover all the administration and billing processes and operations..

The remaining ten per cent goes towards meeting government obligations such as GST.

At the end of the day, the main things you can do to minimise the price you pay are reduce overall usage in the home and compare electricity suppliers to check if there is a cheaper rate available in your area.