Your usage charges explained

Usually the first things you’ll notice when you receive your Origin bill is the amount and when it’s due. But did you know you could also check your average daily usage and even compare your usage to last year?

What is usage, and how iS IT measured?

On your Origin electricity bill, the average daily usage is measured in “kWh”, which is short for Kilowatt Hours.

What is a Kilowatt Hour?

The watt (W) is a measure of electrical power. You’ve probably seen your light bulbs marked with a watt rating, such as 40 W. Many of your appliances are marked the same way (air-blow heaters use around 1,000 W). The wattage indicates the amount of power an electrical device needs to work.

How much electricity you use is a combination of the amount of electricity (the watt) and how long your electrical device is used. That’s how we get the watt-hour (Wh): the amount of watts used over an hour. For example, a 40 W light bulb turned on for one hour will use 40 Wh of electricity.

An electricity bill records the number of kilowatt hours (kWh) consumed over a period of time – usually around three months when the meters are read. A kilowatt-hour is simply a thousand watt-hours. For example, using a 4,000 W air-conditioner for one hour will consume 4 kWh of electricity (or 4,000 Wh).

What costs are included in electricity usage?

Getting electricity running through your home is quite a complex task. 

Let’s look at New South Wales (NSW) as an example. As the diagram below shows, electricity needs to be generated or made using coal, natural gas or renewable energies. It’s then distributed across the country via the ‘grid’ – using poles and wires that connect to your property. To then have electricity connected and running through your home it needs to be bought and supplied by a retailer, like Origin. 

You can see from the above example that in NSW, the cost associated with networks supplying electricity to your home or business can account for over half of the charges on your bill. Networks distribute this electricity via a grid made of substations, poles and wires. Retailers like Origin don’t own or operate these poles or wires – but we do pay other businesses to deliver the energy.

The other major contributor is the cost to generate electricity. Companies buy fuels like coal, gas or biomass, and then generate electricity at power stations – with the costs associated with this process included in the amount you pay.

The final part of the usage costs are all those administration costs, like billing and customer service charges – as well as any other government charges that apply in each state.

So, how is your bill calculated?

The cost of electricity is worked out using a ‘tariff’ or ‘rate’. This determines how you pay for your electricity usage. Tariffs are recorded on the electricity bill in cents per kilowatt-hour (c/kWh).

Energy retailers like us, usually offer two types of tariffs. The most common tariff is a flat rate, which charges you the same rate for electricity all day. Another type of tariff is the time-of-use tariff, which charges you less for using energy in off-peak hours, and more when you use energy during peak hours. The best type of tariff for you depends on your living situation, as well as what time of day you use most of your energy.

So, the next time you receive an electricity bill from us, remember that the cost of your usage is based on the number of kilowatt hours (kWh) you’ve consumed over a certain period of time – and that your charges are made up of generator costs, network fees, retailer services and state based schemes. 

For more information on how to navigate your bill, read our guide here

Costs included in your electricity bill data sourced from NSW Independent Pricing and Regulatory Tribunal (IPART) Review of regulated retail prices and charges for electricity. This data is based on a typical NSW bill as at June 2013. Note IPART's estimate of the cost of the carbon scheme has been removed and percentages adjusted accordingly.

Does your latest bill seem higher than usual?

If you’ve received an unusually high energy bill, there could be a few reasons why. Changes in the weather and your lifestyle can mean changes in your energy consumption – and your bills. So we've put together a checklist of the most common reasons for higher than usual bills.

Read our high bill checklist