Despite electricity prices varying from state to state, generally around half of the average electricity bill is made up of transmission and distribution network costs.
Different organisations own and manage these transmission and distribution networks. Queensland, New South Wales and Tasmania are all state-owned, while South Australia and Victoria are privately owned.
Each of these organisations has costs associated with the following:
- The building of new substations, power line towers and wires to cope with growing peak demand.
- Fixing faults and damaged power lines to ensure there will be no unnecessary outages.
- The maintenance of poles and wires, related infrastructure such as substations, and the electricity meters located at every house and business across the country.
The majority of these costs are passed onto energy retailers, who then pass them onto consumers via an electricity bill. The Australian Energy Regulator is tasked with overseeing the entire process.
A few other factors may influence the electricity prices for your home or business.
- The wholesale market cost of electricity from generators all the way to customers is largely determined through the NEM, with around $10 billion of electricity traded through it annually;2
- States differ in their pricing structures due to grid investment strategies and the use of cheaper fuels, such as Victoria’s use of brown coal.
- Rooftop solar panels and other Government energy-efficiency schemes play part in electricity costs, as does the Australian Government’s Renewable Energy.
For a better understanding of Australia’s gas and electricity markets, view the State of the Energy Market 2015 report.