What’s actually on your electricity bill (and where your money goes)

Electricity bills can be confusing. You get the number - usually higher than you'd like - but what are you actually paying for?

Let’s break it down so it makes sense. Whether your bill is monthly or quarterly, it’s made up of a few key components. And no, it’s not just about how many lights you leave on.

This is the big one: you’re charged for how much electricity you actually use.

A kilowatt-hour (kWh) is the standard unit of electricity. It’s how much power you’d use to run a 1,000-watt appliance for one hour.

Most households in Australia use 15 - 25 kWh per day, depending on the size of the home, appliances, and season.

For example:

  • Run an air conditioner for 5 hours = 5 kWh
  • Boil the kettle 6 times = ~0.5 kWh
  • Do a load of laundry = 1 - 2 kWh

Rates vary by state and provider, but many Aussies now pay around 30 - 40 cents per kWh. If you use 20 kWh/day, that’s $6–$8 a day just in usage.

Daily supply charge just to stay connected

This charge has nothing to do with how much electricity you use - it’s a flat fee just for being connected to the power grid.

It typically ranges from 80 cents to $1.50 per day.

That adds up to $300 - $500 per year, even if you barely use any power.

It covers things like:

  • Meter reading and maintenance
  • Admin costs of staying connected
  • Infrastructure upkeep

Even if you go on holidays or use solar power for a few days, this fee still applies.

Network costs: The poles and wires

A big chunk of your bill goes to the companies that actually deliver electricity to your home - not the ones who generate it, and not your retailer either.

These costs include:

  • Building and maintaining the grid (poles, wires, substations)
  • Managing outages and repairs
  • Upgrading infrastructure to handle more demand or renewables

Depending on where you live, network costs can make up 35–50% of your total bill.

Why so high? Australia has a huge landmass and relatively few people per square kilometre - so delivering electricity is more expensive than in many other countries.

Environmental charges & green scheme costs

This one sounds good in theory - and it is, but yes, you’re helping fund Australia’s clean energy transition.

Your bill might include:

  • Renewable Energy Target (RET) scheme contributions
  • Carbon offset programs
  • Feed-in tariff support for people with solar panels

These aren’t huge charges on their own, but together they add a few percent to your overall bill - and they’re often bundled in with your usage rate or supply charge, so you don’t see them itemised.

Retailer costs: Billing, support, and profit

Your electricity retailer is the company that sends you the bill. They don’t generate the power or manage the grid - they buy wholesale electricity, repackage it into plans, and sell it to you.

Your bill includes:

  • Customer service
  • Billing and admin
  • Marketing
  • A margin for profit

Retailers compete on price, which is why comparing plans can make a big difference. But if you’re on a default or standing offer (the "standard" plan), you might be paying more than you need to.

A quick recap: Where your money goes

Here’s a rough breakdown of how your electricity bill might be divided:

Component
Approx. % of bill
Wholesale electricity costs
30 - 40%
Network (poles & wires)
35 - 50%
Retailer costs & margin
10 - 15%
Environmental schemes
3 - 7%

These numbers vary by provider, location, and plan - but the general pattern is the same.

Want to pay less?

Many people are on plans that are more expensive than they need to be - often just because they haven’t compared in a while.

Even a 5 - 10% saving could knock $150 - $300 off your annual bill.

So, if you’re wondering whether you could be getting a better deal…

Call Compare Energy on 1300 790 106

We’ll check the best plans in your area and help you switch - free of charge.