What makes up my electricity price?

Posted in Energy essentials

Electricity Bill

While you only receive one energy bill each month or quarter, it takes more than just your power company to deliver electricity to your home. 

There’s a whole supply chain to make the raw materials of coal, gas, water, wind and sun into electricity to power your home, and everyone’s responsible for doing their bit.  As a result, there are a number of charges that go into the usage rate you see on your electricity bill that aren’t just your energy company’s.

 

Generation costs

Part of what you pay for on your power bill is the cost of generating the electricity you use, whether that be through coal-fired power, renewables or other generation.  This is also known as the wholesale cost of energy.

 

Transportation costs

Energy is transported to your house through the electricity poles and wires. These are maintained by the energy networks and their charges makes up another large chunk of your energy price. 

 

Your energy company’s profits 

While they don’t explicitly tell you, most power companies build their margin into your usage rate. This means the more energy they sell you, the more money they make. 

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