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Electricity costs affect prices
The cost of supplying electricity is increasing right across Australia.
What is included in the electricity price?
Electricity prices are made up of four costs:
- Generation costs - creating electricity at a power station
- Transmission costs - building and maintaining the state's extensive high voltage powerline infrastructure
- Distribution costs - building and maintaining the state's network of poles and wires that deliver electricity to homes and businesses
- Retail costs - connecting customers, billing customers and managing accounts
To break it down, almost half of the cost you pay is network costs (transmission plus distribution) and generation costs are slightly less. Together these total 91 per cent of the cost of supply, while retail costs make up around 9 per cent.
Costs that impact on electricity prices
Electricity infrastructure
ENERGEX and Ergon Energy will spend approximately $15.6 billion from 2010 to 2015 on electricity network infrastructure, maintenance and operations to cope with increased electricity demand. We all pay a portion of this cost through our electricity bill. This investment in our electricity system increases the transmission and distribution components of the regulated tariff.
Fuel sources
Recently, as the cost of coal, gas and other fuels used to produce electricity has increased, this has raised the generation cost in the regulated tariff. As fuel costs increase, they drive up the regulated tariff and the price we pay for electricity. The potential introduction of a national scheme to reduce greenhouse gas emissions at some time in the future will also increase the costs of electricity from fossil-fired (coal and gas) power stations.
Last updated 27 June 2011