Unless you have an off-grid solar system, all households need to be connected to the energy grid to power their homes. The energy plan you choose can make a difference to how much you end up paying for that energy.
What makes up your electricity bill?
When you use electricity, there are several costs that go into your bill. These include:
- Wholesale energy costs: The cost of the electricity generated.
- Network costs: Costs associated with transporting the electricity to your home or business, such as maintenance of the electricity poles and wires.
- Environmental charges: Costs related to various State and Federal environmental schemes.
- Market fees: Fees your retailer pays to the Australian Energy Market Operator (AEMO) for operating in the market.
- Retail costs: Costs that cover your retailer’s operational expenses.
How to read your energy bill
Your energy bill will include 2 or 3 main charges:
- The supply charge: This is a daily charge you pay to have energy supplied to your home, regardless of how much you use. This helps cover the network costs.
- The usage charge: The usage charge covers the energy you use during the billing period.
- A solar feed-in tariff: If you have solar panels, the feed-in tariff is the amount you’re paid for any solar power you export back into the grid.
What is the Victorian Default Offer?
In Victoria, the government sets a Victorian Default Offer (VDO) each year. This is a regulated electricity price benchmark designed to make electricity plans more affordable and easier to compare.
All energy retailers must show how their prices compare to the VDO. This makes it easier to compare different energy plans as, when choosing a plan, you can see how their prices compare.
Choosing the right energy plan
The energy plan you choose will not only impact the amount you end up paying, but other features you might value.
For example, some energy providers, like Arcline by RACV, will carbon offset your energy usage. This means we'll offset the energy you use with carbon credits.
Other energy plans prioritise a higher feed-in tariff for solar households, but might also have higher usage rates or daily supply charge.
Whatever plan you prefer, switching energy providers can be a great way to save money on energy as there are always new offers becoming available.