Ever looked at your electricity bill and wondered what all those charges mean? Breaking it down makes understanding where your money goes and how you might save much easier. Electricity bills don’t have to be a mystery. Once you know what each charge is for, you’ll see where your costs come from and where you can cut back. Whether you’re a homeowner, renter, or running a small business, understanding your bill can help you take control of energy costs.
Quick summary:
Your electricity bill in Australia is mainly calculated from
• supply charges (a fixed daily fee for maintaining your connection)
• usage charges (cost based on how much electricity you consume in kWh).
• Some bills may also include demand charges for peak power use, network or metering fees, environmental costs, and applicable GST, discounts, other addition fees (surcharge, etc.)
Understanding your tariff type, usage patterns, and available discounts can help you reduce costs.
How Electricity Bill is Calculated
Most electricity bills in Australia break down into two main factors: supply charges and usage charges, which can differ depending on your plan. In addition, bills may include other costs, which we’ll explain in detail below.
How supply charges are calculated
You pay a daily supply charge even using little or no electricity. This fee covers maintaining the electricity network and keeping your connection active.
• Usually shown as cents per day or c/day.
• Example 110c*/day × 30 days = $33 for the month.
*This is for illustration purposes only. The figures shown do not reflect current electricity prices. Please check Sumo’s website for accurate pricing.
How usage charges are calculated
Usage charges make up the most significant part of your electricity bill. They are based on how much electricity you use, measured in kilowatt-hours (kWh). You’ll usually see this on your bill under “Usage” or “Energy Charges”.
The total cost for this usage doesn’t just depend on how much electricity you use. It also depends on your plan’s tariff type, which determines the rate you pay per kWh and when it applies.
Common types include:
Tariff Type | How it Works |
| Single Rate | Same price per kWh at any time. |
| Time-of-Use (TOU)** | Different rates for usage depending on when the power is used (e.g., peak vs off-peak) |
| Controlled Load*** | Additional tariff measured separately from your general household usage. It can be added to your Single Rate or TOU plan and usually applies to specific appliances (like electric hot water systems or pool pumps) that run at set times, often overnight, for a lower rate. |
** Time-of-Use (TOU) tariffs aren’t available everywhere. They usually require a smart meter and depend on your electricity distributor and network area. TOU plans charge different rates depending on when you use electricity, with time periods typically including:
Peak: Higher rates during busy demand times (usually weekday afternoons/evenings).
Off-peak: Cheaper rates during low demand (often overnight or weekends).
Shoulder (if offered): A middle rate that sits between peak and off-peak.
Not all distributors use the same combinations. Some only have peak/off-peak, while others include shoulder periods too.
*** This is an additional tariff that can be added on top of your Single Rate or TOU plan.
Read more here: Understanding Energy Tariffs
Also, your electricity tariff depends on your meter type and network area.
Understanding your tariff type is important because it determines how and when the rate per kWh is applied to your usage.
Calculating Your Usage Charges
The way your usage charges are calculated depends on your tariff type.
Here’s an example of how your usage charges are calculated under a Single Rate plan:
Plan Type | How it Works | Example Usage Split | Bill Total |
| Rate | One flat rate: 30c/kWh | 400 kWh × 30c | $120 |
Under a Time of Use plan, your usage charges vary depending on when you use electricity. Examples are shown below:
Plan Type | How it Works | Example Usage Split | Bill Total |
| TOU – Even split | Peak: 40c/kWh, Off-Peak: 20c/kWh | 200 kWh peak × 40c + 200 kWh off-peak × 20c | $120 |
| TOU – More in peak | Peak: 40c/kWh, Off-Peak: 20c/kWh | 300 kWh peak × 40c + 100 kWh off-peak × 20c | $140 |
| TOU – More in off-peak | Peak: 40c/kWh, Off-Peak: 20c/kWh | 100 kWh peak × 40c + 300 kWh off-peak × 20c | $100 |
Your choice of tariff can greatly impact your bill, especially if you use electricity at different times of the day or have high-usage appliances.
How demand charge is calculated in an electricity bill
Demand charges are becoming more common for households. Some electricity retailers now include them on certain tariffs to reflect the extra strain on the grid from high household energy use, especially with electric vehicles (EVs) and other high-power appliances.
These charges are calculated based on your highest power usage during a peak period, typically a 30-minute interval (Read more here), rather than your total consumption. So even if your overall electricity use seems moderate, short bursts of high usage can push your bill up.
Demand charges vary across different electricity distributors and retailers. Demand charges may also be different in ‘summer’ (November-March) and ‘winter’ (June-August).
Here’s how it works:
• Peak demand recording: Meter tracks the maximum power you use during peak periods. For example, this could be when you run your electric oven, washing machine, and EV charger all at the same time.
• Kilowatt demand (kW): Your peak usage is measured in kilowatts (kW). The higher your peak demand, the higher your demand charge.
• Calculation: The provider multiplies your peak kW by a specified rate (e.g., $15 per kW).
Demand charge = Peak kW × Rate per kW × Number of days in billing period
This demand charge is added to your regular usage charges and is separate from your normal kWh consumption costs.
If your electricity bill includes a demand charge, being mindful of peak power usage can be crucial for keeping energy costs in check.
Note:
Always check your plan details to see if demand charges apply to you.
The tariff applied to your bill usually depends on factors like your meter type (for example, a smart meter) and the electricity network in your area.
This means the tariff structure applied to your meter generally determines which energy plans are available. If you’re unsure which tariff applies to your property, the best option is to contact the SUMO Energy sales team for guidance.
Putting It All Together
Now that you know the different parts of your electricity bill, here’s how it all comes together in a typical calculation. Your electricity bill* is calculated like this:
*This is for illustration purposes only; the figures shown do not reflect current electricity prices. Please check Sumo’s website for accurate pricing.
Additionally, other factors can affect your bill, such as any discounts, rebates, or promotions. While our rates already include GST, the image above shows how much of the bill is attributable to GST. Actual bills may vary monthly, so it’s always best to check the details with your energy provider.
These calculations are handy for budgeting or comparing energy plans, but remember, actual bills can vary monthly.
Common Mistakes When Reading Electricity Bills
We know how confusing electricity bills can feel, even when all the information is in front of you. It’s easy to misread or overlook certain details, leaving you wondering why the total seems higher than expected. Here are some common areas where people often get tripped up:
• Mixing up usage and supply charges: Many assume the bill only reflects the electricity consumed. However, daily supply fees can account for a significant part of the total, even if actual usage is low.
• Not understanding your tariff: Sometimes it’s easy to overlook the type of plan you’re on. Your tariff determines how much you pay for electricity at different times or in different situations. For example, if you’re on a Time-of-Use plan, using most of your electricity during peak hours can lead to a higher bill than expected. A simple way to avoid this is to review your household’s usage patterns and choose a plan that better matches your needs.
• Overlooking discounts or credits: Some plans offer discounts or credits but don’t always apply automatically. It’s easy to miss them if you don’t check carefully. Reading the plan’s Terms & Conditions can help you understand which benefits you’re eligible for and avoid paying more than necessary.
• Ignoring the billing period length: Electricity bills don’t always cover exactly one month. Some bills may be quarterly or for irregular periods, and the number of days in the billing period can vary. A longer billing cycle can increase the total amount, even if daily usage hasn’t changed.
• Comparing bills across different seasons: Electricity consumption can vary with the weather. Higher in summer due to air conditioning or in winter for heating. Comparing bills without accounting for seasonal differences can be misleading. A better approach is to compare usage with the same period from the previous year for the same property, which gives a more accurate picture of changes in energy use.
Understanding how your bill is calculated helps you take control of your energy costs and make informed decisions about your energy plan. Knowing your usage, tariff, and discounts can make a noticeable difference in your monthly expenses.
Learn more about how to reduce your electricity Costs? Click here
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