Understanding your power bill 

I can't make sense of my power bill. Help!

If you have trouble understanding the contents of your energy bill or invoice, you’re not alone. It’s important to be able to make sense of it, so you know what you are being charged for. It can also be useful  if you want to compare the prices of a range of providers.

Read on for a breakdown of the standard items found on most electricity bills.

What you’re charged for
Your monthly power bill includes the cost of:

  • generating the electricity,
  • transmitting it to the national grid,
  • distributing it to your area (by a lines company),
  • selling it to your household (they are the companies that send you the bills), and
  • a small Electricity Authority levy.

What’s in your bill
The exact layout and wording of your bill will of course depend on which provider you are with, whether it’s for gas or electricity, and whether it is for a domestic or business account.

They will generally have the following items:

  • An ‘ICP’ – the unique code identifying the property which is being supplied by the retailer
  • The period for which you are being billed, including the total number of days (usually about one month) i.e. the billing period
  • Whether the billed amount is for estimated usage or usage according to a meter reading
  • The name of your pricing plan
  • The type of meter being used to measure your power usage and its identification number
  • The amount you’re being billed.

The bit you’ll be most interested is the breakdown of the amount you’re being billed. This is split into:

  • Daily fixed charge – this is based on a fixed rate per day and is displayed as ‘cents per day’ or c/day. The fixed rate varies between pricing plans.

Daily fixed change = daily fixed rate x number of days in the billing period.

This amount covers meter rental, meter reading costs, and usually also a fixed fee charged by network operator/lines company.

  • The variable rate charge – this is based on your power usage (displayed as units or kilowatt hours kWH) and the variable rate (displayed as cents per Unit or kilowatt hours c/kWH).

The units or kWH may be from a recent meter reading or from an estimate.
Variable rate charge = variable rate x kWH used

  • GST on the total of the fixed rate amount and the variable amount
  • Early payment (or other) discount, if applicable

So if you want to compare your current supplier’s prices with that of another one, you need to check both their fixed rate and their variable rate. You can go online to What’s My Number to find out whether you could save money by switching to another provider.  

Understanding pricing plans
Each electricity retailer has a range of pricing plans to suit different types of customer, and  sometimes you can save money on your power bill just by changing your pricing plan.

For example, if your household uses less than 8,000 kWH per year, then a low-use plan - which has a lower daily fixed rate  but higher variable rate – is likely to be a good option. 

On the other hand, if your household uses more than 8,000 kWH per year, then you might benefit from a plan which has a higher daily fixed rate but a lower variable rate.

You can talk to your provider to check whether you are on the best plan for your situation.

Help with understanding your bill, from your provider
Some energy providers have on their websites, diagrams with notes and other information to help customers understand their invoice, for example:

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What can I do if I'm having problems paying my bill?
If you’re having difficulties with paying your power bill – especially if you are on a low income or are medically dependent on the power supply to your home - contact your energy provider as soon as possible.

They can discuss possible ways to make it easier for you to make your payments, or put you in contact with agencies who might be able to help. You can also read our information for medically dependent and vulnerable energy consumers.  

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Would I be better off on a fixed rate plan?

Some power companies offer a payment plan in which the cost of your power usage remains the same for a specified period of time (a fixed rate plan). As with a fixed rate mortgage, being on a fixed rate plan with your power supplier can help you manage your payments because you can be confident that for the term of the plan (generally around two to three years), the cost of your power supply will stay roughly the same (as long as your usage stays about the same).

Although your usage cost (see the previous question) would be fixed, some parts of your electricity cost may still vary. For example, if there is a change in the amount of the Electricity Authority levy, the cost of meter rental or meter reading, or in the lines fee, then your power bill may change accordingly.

Another thing to bear in mind is that the power company may charge customers different rates depending on where they are located, so if you move to a different part of the country and stay with the same supplier your rate would change.

If you go on a fixed rate plan and end the contract early, you may be charged an “exit” fee e.g. if you change to a different power company or move to an area not served by your power company.

Before you decide, check the contract (or “offer”) for details of these conditions.
You can also have a look on PowerSwitch to compare the different payment plans (including fixed rate plans).