How Do Electricity Bills Work? Understanding Your Bill

It’s a source of frustration for so many Australians who think they could get on top of their energy expenditure if they could just answer that one question: How do electricity bills work? Fortunately, not only is Billy Sumo great at comparing energy prices and saving you money, but ‘Bill’’s his middle name. Not really – Billy Bill Sumo would make him sound like a sumo wrestler from the wild west. But regardless of that, he can definitely help you make some sense of that energy bill.

While we all wish our energy bills would tell us clearly that Joanne’s laptop is responsible for the high power bills, or that Gareth spends way too much time blow-drying his hair for that perfect Saturday night style, unfortunately that isn’t to be. But here’s everything else you need to know about your electricity bill.

How Do Electricity Bills Work: Knowing the Basics

While there isn’t usually anything too complicated within your electricity bill, it does pay to check it over carefully. This is especially true if you’ve changed providers, moved house, or maybe it’s even the first electricity bill you’ve had. All the basics are up there like your name, the address for which you’re being charged, and your account reference number. The account number will be important when you get to the payment stage, or if you need to call the energy provider with any issues. Coincidentally, the provider’s phone and contact details should be somewhere at the top of the bill too.

Probably the most important thing you’ll find, usually in pretty bold print because the energy companies like to have their bills paid, is the due date. You don’t want to miss that one, because depending on your plan, there may be some usage cost reductions included. These are conditional upon you paying the bill before the due date. Billy says, “Pay on time…sorry, I can’t rhyme.”

All the Charges

When you first look at the charges on your electricity bill, it can be a bit overwhelming. How do electricity bills work?! Lots of large numbers, measurements you’re unfamiliar with and really, it’s hard to know what you’re looking at. Every bill will vary of course, but below are a few of the different charges and rates you’ll see.

Peak Rates: On a time of use rate plan? You’ll see a section showing you how much energy you’ve used during peak hours. This will show when the rate is going to be higher.

Controlled Load Rates: Just like above, except showing what you’ve used in the off-peak period when rates are lower.

Tariffs: Your bill should clearly show what tariff you’re being charged at. This ties in with the peak and controlled load rates above, and will reflect a time of use tariff. Conversely, there will just be one fixed rate for all your general usage if you are on a fixed rate tariff.

Other Fees: Here is where you might see things like connection fees for new customers or even late payment fees if you’ve paid a previous bill late.

Usage Comparisons

It’s easy to just gloss over some of the graphs and comparisons appearing on your energy bill. However, we recommend taking the time to figure out what they’re telling you. How do electricity bills work? These can be invaluable in working out patterns of energy usage, and it can certainly help inform you of what to look for when you’re shopping around for a new energy provider.

If you’re on a fixed rate tariff but you can see that you use most of your energy in off-peak periods, you may want to consider switching to a time of use tariff. If you’re already being charged for peak and off-peak use, but most of your usage occurs during peak period, it could be worth considering a fixed rate tariff.

You can also see historical patterns and see that your usage increases in the summer months. Maybe you could use the air-conditioner less and think of other ways to keep cool?

 

Payment Methods

Most providers will have pretty similar payment methods available, and all the details are usually at the bottom of the bill. If you’re sending a cheque, the bottom of the bill actually serves as a payment slip you can tear off. You’ll also find the BPAY reference numbers (you may need to include your reference number from the top of the bill if no other reference is specified), as well as phone numbers to call or websites to visit for credit card payments.

Another option for payment is direct debit, and there may be some details about this on the bill too. It can be a good option so that you never have to worry about payment, however just make sure you’ve got sufficient funds in the account to avoid rejected payments and possible late fees. Many providers also offer discounts for direct debit, so if it suits you, it is definitely worth exploring.

Again, we’d remind all customers to pay special attention to the due date. If you are on a plan that offers a reduced usage rate for making payment on time, then you’re throwing money away by paying late – not to mention the additional late fee you’ll probably see on your next bill.

So… How do electricity bills work? If you’d like more information about this topic, we’ve got a range of articles on how individual providers structure their bills which will give you even more detailed information:

• PowerDirect
• Red Energy
• Sumo Energy
• Alinta
• Powershop
• AGL
• Origin Energy
• Energy Australia
• ActewAGL

Check out these articles and we hope you’ll never have to ask ‘how do electricity bills work?’ ever again!