Shining a light on the cost of electricity in Victoria

Shining a light on the cost of electricity in Victoria

If you’ve been following the rising cost of electricity in the news lately, then you may have already read a recent report from The Brotherhood of St Laurence, a not-for-profit based in Victoria that works to reduce poverty and homelessness in Australia.

The report, which broke down the average electricity bill across five states to see exactly what consumers are paying for, was particularly illuminating (sorry, we just couldn’t resist the pun!) for consumers in Victoria.

If you live in NSW, you’re used to hearing about how the poles and wires are gold-plated and, as such, they’re more expensive to maintain, a cost that’s passed onto consumers. This is reflected in the data, which shows more than 15 cents per kilowatt-hour goes toward ‘network charges’ or maintaining the poles and wires, while the total average price of electricity in New South Wales is a little over 30 cents per kilowatt-hour.

Victorians, on the other hand, have long been told that the cost of electricity is more expensive in New South Wales precisely because of those fancy gold-plated poles and wires, which the consumer has to pay to maintain. That explains why Victorians pay almost half what New South Welshmen do in network charges to maintain the poles and wires, but it doesn’t explain why they’re paying nearly 35 cents per kilowatt hour for electricity – or 25 cents, compared to 15 in New South Wales – in ‘non-network charges’.

What are you really paying for when it comes to the cost of electricity?

A portion of the money you spend on non-network charges go towards things like metering, the wholesale cost of generating electricity, retail charges, and other initiatives like the state Energy Efficiency Target and the federal Renewable Energy Targets.

When the Gillard Government was in power, these environmental charges, along with the carbon tax, were often blamed for the rising cost of electricity, but although they have increased significantly in the six years to 2014, the amount you pay is negligible (approximately $100 each year) compared to the almost $600 paid in wholesale and retail charges.

So it’s costing more to generate electricity, then?

If it’s not the government gouging us on pesky environmental initiatives, it must be that it simply costs more to produce electricity, right? Well, yes and no. Certainly the cost of generating electricity has increased at times over the last six years, but we’re really paying the same wholesale price for electricity now as we were in 2008, after reaching a six-year high in 2013.

What has increased rapidly and unabated for the last six years, are the retail charges you pay to your power company – or their profit margin, in other words. The report gives the number as a range, with the actual number falling somewhere between an upper and a lower bound.

Since 2008, the upper bound amount has increased from less than $150 per annum to more than $450; the lower bound figure is now more than $350 a year, where six years ago it was less than $100.

How much is customer service really worth?

According to the average electricity retailer: $400. That’s the price they’ve put having the privilege to experience long phone call wait times and a paper bill (if your provider doesn’t already charge extra for that).

So if you don’t think you’re getting enough bang for your buck, switch to Bulk Energy. We’ve helped thousands of Aussies save reduce the cost of their energy bills, and we do the same for you too. Join the movement today!

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