Breaking down the numbers: electricity bills explained

Friday, 10 April 2015

Posted by Rebeccah Elley

Does your electricity bill make less sense than the ending of the TV Series Lost?

The Mozo team has scoured example bills from Australia’s major providers - AGL, Energy Australia and Origin - to break through the financial jargon to help you read your electricity bill and understand your kwh from your off peak tariffs. You can also compare energy plans and prices from these providers and more in your area using Mozo's electricity price comparison tool.

1. What does kWh stand for?

Those three little letters “kWh” scattered across your electricity bill are an abbreviation for kilowatt-hour and are a unit of measuring energy consumption that is equal to 1,000 watt-hours.

Stay with us...we promise it’s not as complex as it sounds!

Let’s give you a scenario. Say you have a 3,000 watt-hour (3kWh) electric stove at home and cook up some spag-bol for the family for 1 hour. If you’re charged 0.20 cents for every 1kWh consumed, you will be charged 0.60 cents.

2. How do providers determine how much electricity I’ve used?

There are two main ways an electricity provider may find out what your usage has been.

Actual usage: Firstly, your provider will read your meter at the start and end of the billing period, usually every 3 months or 91 days. On your electricity bill you may see the term ‘start read’, which is the number that was read at the beginning of your bill cycle and ‘end read’ the number when the meter was last read. So if your ‘start read’ was 8,000 and your ‘end read’ was 9,000, your total usage was 1,000kWh during that period.

Alternatively, if you have a smart meter in your home, your electricity usage will be measured every 30 minutes, and you will be charged different rates, depending on the time of day you use electricity.

Estimated usage: This means that the provider hasn’t used the actual meter reading to calculate your power usage, instead they have estimated your usage based on your previous electricity consumption.

3. Why is my bill ‘estimated’?

If you see the word ‘estimated reading’ on your electricity bill, the provider hasn’t been able to access your meter, so you could be paying more than you actually used. Your power company should leave a note to let you know that they’ve come to inspect your meter and were unable to gain access. The best way to avoid an estimated bill is easy, simply take the time to ensure there is easy access to your meter.

4. What does ‘balance brought forward’ mean?

If you’ve missed a previous electricity payment, the balance that is owed will be brought forward to your next bill. The amount will then be added to the ‘total due’, as well as any late payment fees.

Finding it difficult to pay your bill? Have a chat with your provider, as they may offer a hardship plan that will allow you to pay the balance in smaller instalments or spread it out across the year.

5. What are the different types of tariffs?

There are three main types of tariffs electricity providers use for their pricing structures:

Single tariff: Simply put, the rate you are charged will remain the same over the year.

Time of use tariff: You will be charged different rates throughout the day, with the lowest rates charged in ‘off-peak’ times (see below for a full definition).

Block tariff: While you will be charged a standard price for every kWh you consume, once you have gone over the provider’s energy consumption threshold you may be charged a higher price for every kWh - this extra usage is coined ‘peak next’.

6. What does ‘peak next’ mean?

The best way to explain is by giving you an example: One Mozo employee was charged $0.2304 for every kWh her household consumed but once she had gone over her provider’s 4,000kWh annual threshold, she was charged a higher $0.2455. While it might not sound like a lot, if she continues to use 10.97kWh a day over the next 3 months, she will pay an extra $15 at this higher rate.

7. What does ‘off peak’ mean?

As mentioned above, with a time of use tariff you will be charged at a lower price per kWh at certain times of the day when electricity demand is less - usually late at night, early in the morning or on the weekends. So if you’re smart about it you could reduce your electricity bill by cooking up your dinner and doing your washing at off peak hours.

8. Is my energy consumption higher or lower compared to others?

Your electricity provider should have a section on your bill which shows you how your family’s electricity usage compares with other homes in your area. If you find you are tipping over the average, then you may need to think about how you’re using energy and the ways you can cut your family’s consumption. Read our wacky ways to save on energy article for some helpful hints and tips or compare plan prices for your area using our energy plan comparison service.

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